Preamble

The House met at Eleven o'Clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — CYPRIOTS AND MALTESE (DEMOBILISATION)

Sir Wavell Wakefield: asked the Secretary of State for Foreign Affairs if he is aware of the urgent need for an announcement to be made about a scheme of demobilisation for Cypriots and Maltese who, in spite of the fact that neither in Malta nor in Cyprus conscription exists yet, were conscripted in Egypt; and will he make a statement.

The Minister of State (Mr. Richard Law): I have taken due note of the representations made by my hon. Friend. His Majesty's Government found it necessary, in the interests of the prosecution of the war, to conscript British subjects in Egypt for military service and there was, of course, no question of special exemption for Cypriots and Maltese residents in that country. As my right hon. Friend the Foreign Secretary has already informed my hon. Friend, the question of the steps to be taken in connection with Cypriots and Maltese demobilised in Egypt is bound up with the future of the British community in Egypt after the war, which is under active consideration. The report of a Committee set up by His Majesty's Ambassador in Cairo on this complex subject is now being studied in consultation with the Departments concerned, and until final decisions have been taken by His Majesty's Government any public pronouncement would be premature.

Sir W. Wakefield: Does not my right hon. Friend think that these British subjects who have been conscripted in Egypt

are entitled to immediate information about their future demobilisation plans exactly in the same way as soldiers from this country?

Mr. Law: I think it would be a mistake to anticipate the consideration of the Ambassador's report, which I mentioned in my reply, and I hope that my hon. Friend will be content to await that report.

Oral Answers to Questions — WAR AGAINST JAPAN (BRITISH PARTICIPATION)

Sir W. Wakefield: asked the Secretary of State for Foreign Affairs if he is aware that in spite of statements made by the Prime Minister and others to the contrary, there is a widespread belief in the U.S.A. that as soon as hostilities cease in Europe Britain will leave the U.S.A. to fight out the Japanese war; and what further steps is he contemplating to remove this mistrust of British intention to continue fighting with all her power side by side with the U.S.A. until Japan is completely defeated.

Mr. Law: The determination of the British people to fight out the Japanese war to the end at the side of their American Allies has been made abundantly clear both in statements by the Prime Minister and other Ministers. Powerful United Kingdom forces are already engaged against the Japanese. These forces will be increased when the war in Europe comes to an end, and I cannot agree with my hon. Friend that there is a widespread belief to the contrary in the United States.

Sir W. Wakefield: Is my right hon. Friend aware that American visitors coming over to this country have, from time to time, said that there is still a widespread lack of information about this matter in the United States of America; and is he aware that anything further, in addition to this statement, which can be done to let the citizens of the United States know of our determination to fight the Japanese war to the end, will be very helpful?

Viscountess Astor: Is it not true that this is just isolationist propaganda and that all people who want to know realise that Great Britain is determined to fight the Japanese to the end, as it is just as important to Great Britain as it is to the United States of America?

Mr. Law: Yes, Sir, I agree with my Noble Friend. With regard to my hon. Friend's supplementary question, it is certainly most important that the people of the United States should understand that we are in both wars right to the end. As I have said, I believe that there is far more understanding on that point in the United States now than there has been in the past and I am quite sure that the fighting we are doing against the Japanese is every day making the position more and more clear.

Mr. Petherick: Could not the American Government itself help in that direction?

Oral Answers to Questions — GERMAN CRIMES (PUNISHMENT)

Mr. G. Strauss: asked the Secretary of State for Foreign Affairs whether he can now make any further statement about the intentions of His Majesty's Government to treat as war criminals those responsible for the murder and ill-treatment of anti-Nazi Germans in concentration camps or elsewhere in Germany.

Mr. Law: As my right hon. Friend the Foreign Secretary informed my hon. Friend in reply to a question on 4th October, crimes committed by Germans against Germans are in a different category from war crimes and cannot be dealt with under the same procedure. But in spite of this, I can assure my hon. Friend that His Majesty's Government will do their utmost to ensure that these crimes do not go unpunished. It is the desire of His Majesty's Government that the authorities in post-war Germany shall mete out to the perpetrators of these crimes the punishments which they deserve.

Mr. Strauss: While thanking the right hon. Gentleman for that reply, which is satisfactory as far as it goes, may I ask him if he can say whether there has been any discussion between the major Allies on this point and whether any agreement has been reached on the subject?

Mr. Law: I do not think I can add to the reply which I have given. This is a very complicated subject and I can assure my hon. Friend it is being taken seriously.

Mr. Moelwyn Hughes: When the right hon. Gentleman refers to authorities, does he mean the occupying authorities, or authorities set up by Germans in Ger-

many; and whatever authority will be dealing with them, under what law will that authority operate?

Mr. Law: The authorities to which I refer are the authorities who will be in control in Germany when the war comes to an end. I think I can leave it to my hon. and learned Friend to imagine who those authorities will be.

Mr. Hughes: Will the right hon. Gentleman answer the second part of my supplementary question?

Mr. Law: As I have said, this is a matter of very great complexity and I do not think I could usefully elaborate the answer I have given.

Mr. Pickthorn: If the matter is of too great complexity for question and answer, does not my right hon. Friend think that some agreement in this country might be got by discussion in this House on this very difficult subject?

Mr. Law: I am sure, Mr. Speaker, the House in general, and my hon. Friend in particular, can throw light on any subject however complicated.

Miss Rathbone: In view of the effect which a very clear announcement might have on the possible treatment of threatened people not yet murdered in Germany by Nazi Germans, could the right hon. Gentleman give an assurance that there is not only an intention to do our best, but that the question of the procedure and the kind of court that will be used, is being thought out in agreed terms? A further announcement would give a general assurance and might be a safeguard to these refugees.

Mr. Law: I really cannot make a further announcement at this stage. The matter is under discussion. It does not concern only us; it concerns our Allies as well, and I hope that the hon. Lady will be content with the answer.

Oral Answers to Questions — YUGOSLAVIA

British Correspondents

Mr. Petherick: asked the Secretary of State for Foreign Affairs whether he has received any assurance from the Partisan leaders in Yugoslavia that Reuter's correspondent and other British journalists who may shortly visit that


country will be given every possible facility to collect and transmit news.

Mr. Law: No, Sir. But I should do what I could to see that they were given proper facilities if that should prove necessary.

Mr. Pickthorn: asked the Secretary of State for Foreign Affairs what British newspaper correspondents have been in Yugoslavia since the relief of Belgrade; and whether the Reuter's correspondent, who is immediately returning to Yugoslavia, is one of them.

Mr. Law: I understand that the following British newspaper correspondents visited Yugoslavia in November and have since left the country:

Harrison of Reuter's.
Hammond of the "Daily Mail."
Cooper of the "Daily Express."
Matthews of the B.B.C.
Weston, Canadian Press.

The answer to the second part of the Question is "Yes, Sir."

Penal Code

Mr. Pickthorn: asked the Secretary of State for Foreign Affffairs what penal code is being used and is to be used in the definition and trial of crimes alleged against persons in Yugoslavia; and whether there is any assurance of amnesty.

Mr. Law: I do not know what penal code is used to try ordinary criminal offences in Yugoslavia. Offences of collaboration with the enemy and his satellites are tried in Serbia by special courts set up under a decree of 19th December last. These courts, which are responsible to the Presidium of the Serb Anti-Fascist Skupstina, are empowered to pronounce sentences up to ten years' forced labour. I do not know whether similar courts have been or are to be set up in the other federal States of Yugoslavia. In addition to these special courts, there are the courts-martial of the National Army of Liberation which have tried and condemned to death a number of "enemies of the State."
As regards the second part of the Question, Marshal Tito proclaimed on 21st November last an amnesty to all persons serving in or assisting Mihailovic's forces or the Croat and Slovene Domobrans who reported to the Partisan authorities by 15th January. This amnesty was not

applicable to persons guilty of crimes such as murder, rape, arson and looting.

Mr. Loftus: Could my right hon. Friend give an assurance that concentration camps are not part of the machinery of government in Yugoslavia?

Mr. Law: I have given the House the position of the penal code as I understand it, and I have nothing to add to what I have said.

Captain McEwen: Would it not be correct to call this an ad hoc penal code?

Political Situation (Consultation)

Captain Duncan: asked the Prime Minister whether the attitude of the Government on the political situation in Yugoslavia, as recently announced by him, was reached after consultation with and in agreement with the U.S. Government.

The Deputy Prime Minister (Mr. Attlee): I would refer my hon. and gallant Friend to the statement issued by the State Department on 23rd January, which is as follows:
This Government has not participated in the discussions concerning the agreement between Prime Minister Subasic and Marshal Tito for the establishment of a unified government in Yugoslavia. We have been kept informed of recent developments however and approve of the main objective namely to enable the Yugoslav Government in exile and the various elements within the country to work together within Yugoslavia in the tasks arising from the liberation.

Captain Duncan: Is my right hon. Friend aware of the interest of many hon. Members, which can be exemplified by the number of questions in the House, about the position in Yugoslavia?

Mr. Attlee: Yes, Sir, I have noticed those questions.

Mr. Riley: Does not my right hon. Friend's reply mean that although the United States Government were not consulted regarding the Tito-Subasic agreement, they have approved of the policy of His Majesty's Government?

Mr. Woods: Have negotiations been undertaken with the U.S.S.R.?

Mr. Attlee: We are in close touch.

Oral Answers to Questions — RUMANIA (STATUS)

Mr. Ivor Thomas: asked the Secretary of State for Foreign Affairs whether, in view of the fact that Rumania now has


the fourth largest army in the field against the Germans, it is proposed to grant her co-belligerent status.

Mr. Law: Before Rumania could be granted co-belligerent status, it would be necessary first to discuss the matter with the Soviet and United States Governments. No such discussions have as yet taken place.

Oral Answers to Questions — ITALY (ARMISTICE TERMS)

Mr. Ivor Thomas: asked the Secretary of State for Foreign Affairs whether, following the precedent set in the case of Finland, Rumania and Bulgaria, he will publish as a White Paper the armistice terms with Italy.

Mr. Law: No, Sir. The decision whether or not to make public the Italian Armistice terms rests with the Governments of the United States, the United Kingdom and the U.S.S.R. acting in the name of the United Nations. If and when a decision is reached by these three Governments that the Armistice terms should be made public, His Majesty's Government will be ready for their part to publish the terms as a White Paper.

Mr. G. Strauss: Can the right hon. Gentleman say what reasons anybody can have for not publishing those armistice terms; and are we to go on until the peace terms are published first, and the armistice terms afterwards?

Mr. Law: I can only repeat that that is a matter for decision by the United Kingdom, the United States and the U.S.S.R., and until they have given that decision, there is no possibility of laying a White Paper.

Mr. Strauss: Why are they withholding their decision? What reason can there conceivably be for not publishing to the world what those armistice terms are, so that we may understand the difficulties of His Majesty's Government in the matter?

Mr. Law: The difficulty of His Majesty's Government, if it can be described as a difficulty, is that we have to work in concert with our Allies. Until the three Allies give a decision, we cannot anticipate that decision.

Mr. Ivor Thomas: Can the right hon. Gentleman say why the three Allies decided to publish the armistice terms in

the case of Finland, Rumania and Bulgaria and not in the case of Italy? Does not the difficulty really come from Marshal Badoglio?

Mr. Law: The difference between Finland, Rumania and Bulgaria, on the one hand, and Italy, on the other, is that in the one case the Allies decided together that publication was desirable, and in the other case they have decided that it is not desirable.

Hon. Members: Why?

Oral Answers to Questions — GREECE

T.U.C. Delegation

Mr. Driberg: asked the Secretary of State for Foreign Affairs what facilities have been afforded to the T.U.C. delegation in Greece to interview spokesmen of E.A.M. or E.L.A.S.

Mr. Law: The fullest facilities have been given to the Trade Union Congress delegation to interview spokesmen of E.A.M. or E.L.A.S. As has already been announced in the Press, the delegation have interviewed four representatives of trades unions associated with E.L.A.S. and on 29th January took part in a conference between these representatives and delegates of the Greek Government and Athenian trades unionists. The delegation have refrained from meeting political parties since the object of their mission is to investigate trades union questions.

Mr. Driberg: Can the right hon. Gentleman say whether, now that the truce is in force, war correspondents also are now allowed to interview spokesmen of E.A.M. or E.L.A.S.?

Mr. Law: That is another question.

Mr. Gallacher: Is it not the case that the trade union delegation are finding it very difficult to get confirmation of the stories told by the Prime Minister and the Secretary of State for Foreign Affairs in this House?

Mr. Law: I do not think so.

Captain Duncan: Arising out of the original reply, as the trade union delegation was an official delegation sent out by His Majesty's Government, will my right hon. Friend publish the official report of Sir Walter Citrine when he returns?

Mr. Law: I think that is a matter that would have to be discussed with Sir Walter Citrine.

Penal Code

Mr. Driberg: asked the Secretary of State for Foreign Affairs whether the penal code to be used in Greece is that which was in force under the Metaxas régime or some other.

Mr. Law: The penal code is that which was in force during the Metaxas régime but it dates from long before Metaxas came to power. I understand that the punishments which it lays down for crimes such as murder and looting have remained unaltered since before the Metaxas régime. It has already been made clear in statements both by His Majesty's Government and by the Greek Government that these are the crimes on which prosecutions will be based and that no one will be charged simply because he took part in the revolt or for holding certain political views.

Political Parties (Discussions)

Mr. G. Strauss: asked the Secretary of State for Foreign Affairs whether he can make any statement about the meeting between the Greek Government and representatives of the E.L.A.S. and E.A.M.; and what conditions have been made by the Regent as to which parties the E.A.M. delegates should or should not represent.

Mr. Law: The conditions which the Regent has made are that the delegations on each side should be limited to three members, assisted by a small number of technical advisers, and that the representatives of E.L.A.S. should be the leading members of the Communist Party. I understand that E.L.A.S. have agreed to limit their delegation to three members but that discussions are still proceeding as to its composition.

Mr. Strauss: In view of the fact that the Foreign Secretary has stated that it is the object of His Majesty's Government that E.A.M. Ministers should form part of the Greek Government, may I ask whether the reason is in order to substantiate the story, since proved untrue, that the Socialist and Radical parties have left E.A.M.?

Mr. Law: As my hon. Friend will understand, this is a matter for the Regent. I imagine that he is insisting on

the delegates being of a certain complexion in order to make sure that this time they will deliver the goods, which has not always been done. I must say that I cannot understand the reference of my hon. Friend to the fact that statements that E.A.M. and E.L.A.S. have shed the Socialist and Democratic parties are now proved to be unfounded. The only proof that I have seen of that is an extremely irresponsible speech made by the hon. Baronet the Member for Barnstaple (Sir R. Acland) in this House yesterday.

Mr. Strauss: Is the right hon. Gentleman aware that the chairman of E.L.T., the Socialist party, a very respected man, is one of those whom—

Hon. Members: Order.

Mr. Speaker: I cannot see what possible connection that has with this Question.

Mr. Gallacher: On a point of Order. The Minister—

Mr. Speaker: Question 13.

Mr. Gallacher: —has said that there is no evidence anywhere.

Mr. Speaker: That is neither a question nor a point of Order.

Mr. Gallacher: On a point of Order—

Hon. Members: Order, order.

Mr. Speaker: The hon. Member must not stand up when I have called the next Question. The hon. Member must obey my Ruling.

British Correspondents

Mr. Petherick: asked the Secretary of State for Foreign Affairs how many British newspapers or news agencies were represented in Greece in December, 1944, by correspondents of British nationality and how many by correspondents of foreign nationality; and whether he will circulate in the OFFICIAL REPORT a list of such newspapers and news agencies with the names of their correspondents and the nationality of such correspondents.

Mr. Law: During December there were 12 correspondents representing British newspapers and news agencies and the B.B.C. in Greece. Of these 7 were British. I am circulating in the OFFICIAL REPORT the particulars for which my hon. Friend asks.

Following are the particulars:

The following correspondents were filing messages to British papers and agencies during December.

R. Bigio (British), Reuters.
E. Bigio (British), "Daily Express."
Hoare (British), "Times."
Harrison (American), "News Chronicle."
Hollingworth (British), Kemsley.
Devaris (Greek), "News Chronicle."
Protopappus (Greek), "Daily Mail."
Moschopoulos (Greek), Exchange Telegraph.
Capell (British), "Daily Telegraph."
Salnsbury (British), "Daily Herald" and "Daily Mail."
Nixon (British), B.B.C.
Modiano (Greek), Reuters.

Some papers had two or more correspondents during part of the month. Others changed their representatives. Only Exchange Telegraph were represented throughout solely by a Greek.

Oral Answers to Questions — LIBERATED COUNTRIES (U.N.R.R.A.)

Mr. Kenneth Lindsay: asked the Secretary of State for Foreign Affairs in what European countries U.N.R.R.A. is at present permitted to operate; and where it is actually operating.

Mr. Law: As the answer is long, I will, with permission, circulate it in the OFFICIAL REPORT.

Following in the answer:

Under the U.N.R.R.A. Agreement and the Resolutions of the U.N.R.R.A. Council, U.N.R.R.A. can only operate fully and freely after the termination of the military period, and it can only operate in liberated territories at the request of the Governments concerned. U.N.R.R.A. has, however, at the request of the military authorities, and acting as their agents, already sent a relief mission to Greece. This mission has been collaborating with the military relief organisation for some time past, and plans are being made for its expansion. It is hoped, moreover, that U.N.R.R.A. will shortly be enabled to start operations on its own account and on an increasing scale in other Balkan countries. The Greeks, Yugoslavs, Poles and Czechoslovaks have all expressed a

wish to receive U.N.R.R.A.'s help, particularly in the matter of supplies, and plans are being made for the despatch of supplies as soon as shipping and other similar difficulties have been overcome.

U.N.R.R.A. also has in hand a limited programme for relief work in Italy, as provided for by Resolution No. 58 of the U.N.R.R.A. Council at Montreal, and an U.N.R.R.A. mission is already in that country making preliminary arrangements. The Governments of France, Belgium, Luxembourg, the Netherlands and Norway have expressed their wish to receive U.N.R.R.A. liaison missions, and such missions are already established in Paris and Brussels. These and other Governments have also asked U.N.R.R.A. to undertake, under the control and direction of the military authorities, the work of caring for and repatriating their displaced nationals in Germany. U.N.R.R.A.'s arrangements for dealing with this problem, as agents of the Anglo-American military authorities, are well advanced and the training of the necessary personnel has been proceeding for some time.

On the other hand, it is not anticipated that the West European Governments will find it necessary to invoke the aid of U.N.R.R.A. for the actual provision of supplies which they expect in most cases to be able to procure and pay for themselves.

Mr. Lindsay: asked the Secretary of State for Foreign Affairs whether, in view of the conditions prevailing in France, Belgium and Luxembourg, he can explain the division of responsibility between the Supreme Military Authority and U.N.R.R.A. for obtaining and delivering supplies; what supplies are in the hands of the military authority; and what amount has been distributed.

Mr. Law: U.N.R.R.A. is not responsible for the importation of supplies into France, Belgium and Luxembourg. The responsibility of the military authorities was indicated in the answer given by my right hon. Friend the Foreign Secretary on 17th January to my hon. Friend the Member for Penryn and Falmouth (Mr. Petherick). As regards the last part of the Question, I am advised that large quantities of relief supplies have been imported by the combined United Kingdom-United States military authorities during the liberation of these countries; but that,


as these include operational reserves, it would not be in the public interest to disclose tonnages.

Mr. Ivor Thomas: Is my right hon. Friend aware that the fact that U.N.R.R.A. is not operating yet in any of the liberated countries in Europe considerably disturbs those who hoped very much from the great talents of this organisation?

Mr. Law: I think my hon. Friend does not perfectly realise that it was never intended that U.N.R.R.A. should come into operation in the field in Europe until what is called the military period had terminated, but I hope that very soon it will be possible.

Mr. Lindsay: asked the Secretary of State for Foreign Affairs whether, in view of the urgent need of bringing relief supplies to the liberated areas and the social and political consequences of failure to satisfy those needs, he will reconsider the terms of reference and executive responsibility of U.N.R.R.A.

Mr. Law: His Majesty's Government are fully alive to the importance of the question to which my hon. Friend refers. I do not think, however, that the solution of the problems involved would be facilitated by any attempt at this stage to revise the U.N.R.R.A. Agreement and the U.N.R.R.A. Council Resolutions which constitute U.N.R.R.A.'s terms of reference.

Oral Answers to Questions — CZECHOSLOVAK GOVERNMENT (BRITISH FINANCIAL ASSISTANCE)

Mr. Petherick: asked the Secretary of State for Foreign Affairs what contribution is being made by His Majesty's Government to the expenses of the Czechoslovak Government.

Mr. Law: In December, 1940, an agreement was concluded between His Majesty's Government and the Czechoslovak Government under the terms of which His Majesty's Government granted a credit of £7½ million to the Czechoslovak Government for the maintenance of their state machinery and armed Forces in this country. Since then His Majesty's Government have granted, in October, 1942, and in October, 1944, two further credits to the Czechoslovak Government each of £5 million.

Mr. Petherick: Has the attention of my right hon. Friend been drawn to a statement which is circulating about the expenses of the Czechoslovak Government, one of the items of which is £157,000 alleged to be for the use of Dr. Benes and his court?

Mr. Law: No, Sir. I have not myself seen any such statement; I shall certainly be glad to look into it.

Viscountess Astor: Is is not a fact that in spite of these loans, Dr. Benes made a separate agreement with Russia?

Oral Answers to Questions — TANGIER

Mr. Martin: asked the Secretary of State for Foreign Affairs whether any negotiations have been opened for the restoration of the international zone at Tangier.

Mr. Law: No, Sir.

Mr. Martin: Would my right hon. Friend take steps to convey to the Spanish people that public opinion in this country will be gravely hostile to collaboration in international action or a condominium with a Fascist Government which has been guilty of breaches of neutrality towards us?

Oral Answers to Questions — BRITISH PRISONERS OF WAR, FAR EAST

Mr. Lipson: asked the Secretary of State for Foreign Affairs if, at the forthcoming conference with Marshal Stalin, he will ask him to make representations to the Japanese Government with regard to the better treatment of British prisoners of war; and to an exchange of prisoners.

Mr. Law: Matters concerned with prisoners of war are dealt with through the Protecting Power, and as a general rule it is better to leave them in the hands of the Protecting Power. It is not, therefore, proposed to raise this question at the forthcoming conference. The hon. Member is, of course, aware that we have already made use of Soviet good offices in connection with the movement of relief supplies from Vladivostock.

Mr. Lipson: Is the Minister aware that negotiations with the Protecting Power have not produced satisfactory results,


and that relatives of British prisoners of war in Japanese hands are very concerned at their treatment? In view of the fact that Japan must be anxious to maintain relations with the Soviet Government could he not reconsider his decision?

Mr. Law: No, Sir, I do not think that this decision, which has been come to after very careful consideration, can be reconsidered. I am, of course, fully aware of the feeling there is among relatives in this country, and I can assure the hon. Member that the Government are doing everything in their power to get better conditions. The difficulty, however, is not really with the channel through which we negotiate, but with the people with whom we have to negotiate.

Mr. Lipson: Would not the Japanese be more likely to listen to the Russian Government than to the Protecting Power? That is my point.

Oral Answers to Questions — CONQUERED ENEMY TERRITORIES (ADMINISTRATION)

Mr. Sorensen: asked the Secretary of State for Foreign Affairs to what extent the Governments of the United Nations have reached agreement on common policy and procedure respecting the administration of conquered enemy territories, treatment of German peoples, utilisation of enemy industrial plant and resources, definition and trial of war criminals and similar issues that arise with the further invasion of Germany.

Mr. Law: I regret I cannot give any information to the hon. Member. Inter-Allied consultation of these matters must necessarily remain secret until the enemy is beaten.

Mr. Sorensen: Surely some kind of agreement exists. At any rate, one should exist. Could the Minister give any indication as to whether there is any disparity in treatment between ourselves and our Allies?

Mr. Law: I know of no such thing, and until the enemy is beaten I do not think any useful purpose would be served by discussing the subject.

Oral Answers to Questions — GERMANY (CONTROL COMMISSION)

Sir Percy Harris: asked the Secretary of State for Foreign Affairs how many appointments the British Government have made to the German Control Commission, and who have been appointed.

Mr. Law: The establishment of the British element of the Control Commission for Germany is based on agreement with our Allies on the work involved. It would not be in the public interest to make a detailed statement on this planning. I may say, however, that the civil and military Deputy Commissioners now in charge of the British element are respectively Mr. I. Kirkpatrick and Major-General S. Kirby.

Oral Answers to Questions — ROYAL AIR FORCE

A.A.F. (Discharge Leave)

Sir John Mellor: asked the Secretary of State for Air whether other ranks of the A.A.F., discharged because redundant, are granted the same amount of leave on discharge as officers for whom no further employment is available are granted on full pay upon retirement; and how entitlement to leave upon discharge compares with corresponding arrangements in the other Services.

The Secretary of State for Air (Sir Archibald Sinclair): The answer to the first part of the Question is "No, Sir." As regards the second part, the arrangements to which I referred in the reply to my hon. Friend on 17th January are in line with those of the War Office. I understand that under Admiralty practice the period of leave granted on discharge varies according to the circumstances of the case.

Sir J. Mellor: Will the right hon. Gentleman say why other ranks get less favourable treatment than officers in this respect?

Sir A. Sinclair: The rule, at the moment, applies to at least two of the Services, if not to the third. It is more difficult for officers to obtain employment quickly and it has been thought right to give them this additional concession, which they have recently obtained.

Warrant Officers (Hotel, Bombay)

Mr. Daggar: asked the Secretary of State for Air whether he is aware that the


case of the warrant officer now serving with a Service commando, R.A.F., who went into the Taj Mahal Hotel in Bombay in company with three commissioned officers, another warrant officer and two non-commissioned officers and was told that on the instructions of the management no drinks could be served to the warrant officers or non-commissioned officers has caused a measure of dissatisfaction amongst other members of the unit to which these officers belong; and will he give further consideration to the matter.

Sir A. Sinclair: I am making inquiries, and will communicate with my hon. Friend.

A.T.C. Service Dress Caps

Mr. Perkins: asked the Secretary of State for Air whether the order prohibiting the wearing of Service dress caps by officers of the A.T.C. has now been rescinded.

Sir A. Sinclair: Yes, Sir. An instruction was issued on 3rd April, 1944, permitting A.T.C. officers to wear the Service dress cap when off parade.

Education Officers

Mr. E. J. Williams: asked the Secretary of State for Air the number of resignations received from educational officers in the R.A.F. in the last three months.

Sir A. Sinclair: Sixty-two of the 1,128 education officers employed in the R.A.F. Educational Service have, within the last three months, given notice to terminate their appointments.

Mr. Williams: Could the right hon. Gentleman give any explanation of the cause of these resignations?

Sir A. Sinclair: I think it is because quite a number of people, now the war is beginning to come to an end, are thinking of leaving their war-time service. While this has been happening, while we have had these resignations on the one hand, we have had during the same period a number of applications for appointments as education officers, of which 34 have been accepted and others are now under consideration.

Mr. Kenneth Lindsay: Has the Minister any idea what has become of these 62 officers?

Sir A. Sinclair: A number of them are still in the Service. I was asked what resignations had been proffered.

Mr. Lindsay: I understand that these men are redirected by the Ministry of Labour. They are badly needed in the education services.

Sir A. Sinclair: That is a matter between me and the Minister of Labour and the Minister of Education.

Mr. E. J. Williams: Surely the Minister must know that it is grave dissatisfaction in the Service that must have caused these excessive resignations.

Sir A. Sinclair: I do not believe there is any true ground for any dissatisfaction which may exist, but I am glad to say that this matter is to be discussed in the House on Friday, when I shall be glad to meet my hon. Friend on the whole subject.

Captain Duncan: Surely the Minister cannot absolve himself from responsibility in not knowing where these men have gone. He must know before he releases them.

Sir A. Sinclair: I do not know what the hon. and gallant Member means by absolving myself of responsibility for where they have gone. I certainly cannot tell the House at a moment's notice where 62 men, who have proffered their resignations, are now.

Mr. E. J. Williams: asked the Secretary of State for Air why he has refused to publish the report of the Committee on the Conditions of Air Force Education Officers.

Sir A. Sinclair: The Committee included a Royal Air Force Officer on the active list and an Air Ministry civil servant, together with two officers of local authorities. The proceedings were private; and the report was made in confidence. It is not the practice—and would impair the relationship of mutual trust which must subsist between Ministers and their advisers—to publish confidential reports of this kind.

Mr. Kenneth Lindsay: Will the right hon. Gentleman give us the gist of the report before we have the Debate on Friday, otherwise it will be difficult to have a discussion?

Sir A. Sinclair: I do not see why it should be difficult to have a discussion. On this matter I have to consider a number of very important issues affecting the whole future of the educational service in the R.A.F. I asked a serving R.A.F. officer and a civil servant to help me, and to join with two distinguished educationists from outside. It is a question of providing me with advice which I asked for, and is purely a domestic matter inside the Air Ministry.

Viscountess Astor: Is it not true that this Committee was set up because there was such grave dissatisfaction among education officers in the Service?

Sir A. Sinclair: No, Sir, and I am glad to make it clear that this Committee was set up because of the immense importance to the future of the Royal Air Force of getting the best possible educational service. We wanted the best advice we could get.

Sir Herbert Williams: Is it not also a question of trust between M.Ps. and the Minister?

Sir A. Sinclair: I do not know what the hon. Member means by that question. I do not think any such question arises.

Sir H. Williams: Surely, without getting unduly excited, the Minister must realise that he said that the question was one of trust between him and people in his Department whereas, in fact, it is merely the other side of the picture.

Sir A. Sinclair: I think Ministers have a perfect right to ask officers serving in their Departments to give their advice frankly on different questions, and that officers would be reluctant to do that, if they knew that that advice was afterwards to be published.

Surplus Acrodromes (Buildings and Land)

Sir Thomas Cook: asked the Secretary of State for Air if he will arrange that, where an aerodrome becomes surplus to requirement, the former occupier shall be given the option to cultivate the land and to purchase Government buildings erected upon it.

Sir A. Sinclair: I am afraid that, in the nature of the case, it is not possible to give a general undertaking that former occupiers shall be given the option to purchase Government buildings erected on

airfields that may become surplus to requirements or to cultivate the land, though either or both may be possible in particular cases.

Mr. Tree: Can the Minister give the House any indication of whether a policy is being worked out in regard to redundant aerodromes, particularly having regard to agriculture?

Sir A. Sinclair: The policy to be pursued in regard to aerodromes when the war is over is receiving consideration. It is, broadly, true to say that there are no redundant aerodromes in this country at the moment, and that there are unlikely to be any until the end of the war in Europe.

Mr. Tree: But what about after the war?

Oral Answers to Questions — CIVIL AVIATION

Ocean-Going Aircraft (Lifeboats)

Sir W. Wakefield: asked the Secretary of State for Air if he is aware that the uncertainty of post-war requirements for British ocean-going aircraft in respect of the carrying of lifeboats is hindering British designers in their post-war designs compared with the instructions given to designers in the U.S.A.; and will he expedite a decision on this matter.

Sir A. Sinclair: No, Sir. I am advised that there is no evidence that design work is being hindered in the manner suggested.

Air Passages (Priorities)

Mr. Kendall: asked the Secretary of State for Air who is responsible for the allocation of priorities for air travel to and from the U.S.A. by the B.O.A.C. or on other machines under his control; and whether passages are allotted to British business men proceeding to and from the U.S.A. for the purpose of arranging for post-war export trade upon the recommendation of the Department of Overseas Trade.

Sir A. Sinclair: An Air Transport Priorities Board, on which the Service and Civil Departments are represented, and of which my hon. and gallant Friend the Parliamentary Under-Secretary of State is Chairman, is generally responsible for supervising the allocation of priorities for passages to and from this country in


British aircraft. All capacity is normally needed for the war, but so far as space may occasionally be available, applications of the character mentioned by the hon. Member may now be considered provided the journeys are duly certified by a Government Department as being in the public interest.

Mr. Kendall: Can the right hon. Gentleman give an assurance that business men here shall have the same facilities in their travel as are afforded to United States business men?

Sir A. Sinclair: No, Sir, I can only give an assurance that the requirements of the war will have first priority in allotting passages. We will then give such passages as we can to facilitate travel by business men.

Oral Answers to Questions — HOUSING

Bomb Damage Repairs (Supervision)

Sir William Davison: asked the Minister of Works what steps are being taken to tighten up the supervision of men engaged in war damage repair work, of which particulars have been sent to him, in view of the volume of complaint from members of the public as to the lack of energy shown and unnecessary delays in carrying out such repairs.

The Minister of Works (Mr. Duncan Sandys): I have inquired into this particular case and am satisfied that there is justification for my hon. Friend's complaint. The contractor concerned has been warned that the standard of his supervision must improve.

Sir W. Davison: Is my right hon. Friend aware that I am getting quantities of letters from all sources as to dilatoriness and lack of supervision and complaints of work taking weeks which could be done in a few days?

Mr. Sandys: In this case, which is not a typical one, the supervision was weak. If a particular contractor cannot control his labour efficiently, it may be necessary to reduce the number of men allotted to him.

Sir Granville Gibson: Is my right hon. Friend aware that I received this morning from a trustworthy source information to the effect that last June a flat was damaged in London by bombing and that for

the last two weeks or more there have been three men working on it, and, when the tenant remonstrated with them for not working and passing their time sitting round the electric fire, the reply was that they had no materials to get on with? What is he going to do about it?

Mr. Sandys: I cannot answer about that particular case. By and large there are no serious hold-ups of any kind due to shortage of material at the moment. There may, of course, be exceptional circumstances in the case in question. The fact that the damage occurred last June is not significant. All last summer's damage is being tackled as a complete programme this winter. It may well be that some houses damaged in September will be repaired before others damaged in June.

Experimental Houses, Northolt

Sir H. Williams: asked the Minister of Works how many experimental houses have been built at Northolt; how many workpeople are now engaged on their maintenance; and how many of the houses have had burst pipes during the recent frosts.

Mr. Sandys: The experimental site at Northolt contains about 30 dwellings. The maintenance staff employed is 5. Damage by frost was caused to pipes in 21 dwellings over Christmas, when only one night watchman was on duty.

Sir H. Williams: . Is my right hon. Friend aware that two or three days ago a friend of mine counted 17 maintenance workers on the job, with 3 in the canteen looking after them? Will he make further inquiries, as the information supplied to him is absolutely inaccurate?

Mr. Sandys: I have made inquiries and I do not think that my information is inaccurate. The other people that he saw, particularly those in the canteen, could hardly be reckoned as maintenance staff, nor would it be their primary work to look after burst pipes. But there has evidently been some negligence, and, as regards the number of people employed on the site, I am looking into that also.

Sir H. Williams: Is my right hon. Friend aware that the number engaged on maintenance work is 17?

Mr. Sandys: I do not think so.

Mr. G. Strauss: But is it not possible to build a modern house in such a way that the pipes will not burst?

Mr. Sandys: These are unoccupied houses but, no doubt, when the frost started, steps should have been taken to see that the water was cut off.

Mr. Bowles: How is it that in Switzerland where there are severe frosts none of these troubles arise?

Mr. Sandys: I understand that water freezes in Switzerland just the same as it does in this country.

Mr. Bowles: Not in the houses.

Pre-fabricated Houses (Cost)

Mr. Key: asked the Minister of Works (1) what is the exact cost as delivered on sites of the Uni-Seco prefabricated houses now being erected in certain London boroughs; the cost of erection; and the total cost excluding only the land;
(2) the exact cost to-day of manufacturing each type of pre-fabricated house which his Ministry has adopted.

Mr. Walter Edwards: asked the Minister of Works what his Department estimates the respective cost of each type of pre-fabricated house assuming full mass production on to-day's prices, or under conditions which might rule six months after the end of the war in Europe.

Mr. Frankel: asked the Minister of Works the average cost, actual or estimated, of transporting and erecting each type of prefabricated house.

Mr. Sandys: Preliminary contracts are being let for the manufacture and erection of sufficient numbers of each type of house to enable the necessary data to be obtained on which fixed production prices can be negotiated. Until this has been done, I am not in a position to give any figures of cost. The same procedure is being applied to the work of erection except that in this case contracts will normally be placed by competition in each locality. The cost of transport is necessarily dependent upon the distances between factories, depots and sites. Until the allocation of numbers and types between the various local authorities is completed and the location of the depots is settled, no reliable estimate of transportation costs can be quoted.

Mr. Frankel: When does the right hon. Gentleman expect to be able to give us the estimates asked for in this series of Questions?

Mr. Sandys: I am sure the House would not wish to press me to give a snap figure based on insufficient information.

Mr. Frankel: When does the right hon. Gentleman expect to be able to give the figure?

Mr. Sandys: We cannot give these figures until we have more experience in erecting these houses. It is a novel operation. No firm at present could give a firm figure as to what it would cost them to manufacture and erect these houses. As soon as we have a certain amount of experience we can negotiate a fixed price contract, and I shall be glad to inform the House of the result. I cannot say how soon that will be.

Mr. Key: Have half a dozen of these houses been erected in the London region?

Mr. Sandys: They are now working on about three sites.

Mr. Key: Have half a dozen been erected?

Mr. Sandys: I should think about three.

Mr. Key: Is it not a fact that 250 were promised every week, beginning on 1st January?

Mr. Sandys: Not that I know of.

Mr. Gallacher: In view of the urgent need for houses in Scotland, would the right hon. Gentleman arrange for Scottish factories to make prefabricated houses?

Mr. Sandys: There is no ban on Scottish production.

Mr. Walter Edwards: asked the Minister of Works (1) if the increase in costs of Portal and other types of prefabricated houses adopted by his Ministry over the original estimates was due to faulty judgment, over optimism or to not taking into account any important factors;
(2) if there has been any increase in the estimated cost of prefabricated houses; how such increase came about; and how did the original estimates go wrong.

Mr. Frankel: asked the Minister of Works (1) if the original estimates of the Portal type houses approved by the Government were based on prices


which might rule after the end of the war in Europe; how does he account for any increase when prices of materials and wages are supposed to have been stabilised; or was it assumed by his Ministry that wages would fall immediately the war in Europe ended;
(2) in view of the fact that earlier statements on the subject always gave the impression that the improved type of Portal prefabricated houses would cost about £600, why it is now announced that the actual cost will be much higher.

Mr. Key: asked the Minister of Works if he will give details of the basis on which the original estimates worked out the cost of Portal and other types of prefabricated houses approved by his Ministry.

Mr. Sandys: As my predecessor explained in another place, the figure of £600 was the target aimed at. It applied only to the steel house, and it was based on the assumption that this would be mass-produced in very large numbers and that production would not begin until after the end of the war in Europe. Since then it has been decided not to wait for the end of the German war before starting upon the temporary housing programme. Owing to the fact that factory capacity and materials needed for the steel house cannot at present be made available it has been necessary to adopt entirely different and in most cases less highly prefabricated types, which are not so well suited for manufacture by mass production methods. In addition, under wartime conditions abnormal costs for labour and various other items will have to be accepted.

Mr. McKinlay: In how many instances is the Department using the soggy mass known as Graycrete in the construction of these houses? Is the right hon. Gentleman aware that where it has been used in Scotland it has cost more to make houses habitable than to build them?

Mr. Frankel: Is it not a fact that every statement that has been made on these prefabricated houses by the right hon. Gentleman's predecessor and the Prime Minister used the figure of £600 as being roughly the cost involved? An answer given me last week admitted that, when the cost is shown, it will be very much higher than £600.

Mr. Sandys: If the hon. Member is quoting the answer that I gave him a week ago, he is perfectly correct.

Mr. Walter Edwards: Was the estimate of £600 per house after the end of the war with Germany based on the assumption that wages in the building industry were going to be reduced?

Mr. Sandys: There was no assumption of that kind. There are certain additional labour costs in war time due to the Essential Work Order and certain other additional costs. But, by and large, the reason for the anticipated increase in the cost of these temporary houses is that we are now making different types of houses under different conditions from those contemplated when the figure was originally announced.

Viscount Hinchingbrooke: In view of the increasing public dissatisfaction with the Portal compared with other types of prefabricated houses, will my right hon. Friend see that it assumes a less important place in the programme than was originally intended?

Mr. McNeil: Does the inference from the answer to the previous supplementary relating to war-time labour costs mean that as soon as the emergency is over the guaranteed working week in the building industry will be withdrawn?

Mr. Sandys: I thought that I made myself clear. It is primarily a question of the additional costs which arise from the Essential Work Order in war-time. There is no wide issue involved.

Mr. Key: Will the increased cost of the temporary houses lead to an increase in the subsidy which the local authorities have expected up to the present moment?

Mr. Sandys: That is a matter which should be addressed to the Minister of Health, but my hon. Friend can be assured that this additional cost will not be passed on to the local authorities.

Mr. A. Edwards: Does the right hon. Gentleman's statement to-day mean that it is finally decided that there are to be no Portal steel houses built in war-time?

Mr. Sandys: As the question has been raised, perhaps I can say that we are aiming at replacing the temporary programme as soon as possible with a programme of permanent house building,


employing many of the methods of standardisation and prefabrication developed in the temporary programme. This, I think, will be more economical and more satisfactory. However, I must make it clear that this major change will necessarily take a considerable time to introduce, and in the interval we must, of course, continue to press ahead as fast as possible with the temporary programme.

Mr. Frankel: In view of the unsatisfactory nature of the reply and the importance of the subject, I beg to give notice that I shall call attention to the matter at the earliest opportunity.

Hand-power Tools

Mr. Astor: asked the Minister of Works whether he will obtain from the United States specimens of the modern hand-power tools mentioned in the Bossom Report with a view to their being made available for study by all parties in the building trade.

Mr. Sandys: A typical selection of the power tools mentioned in the report was brought back by the mission and exhibited both in London and in Scotland.

Mr. Astor: Are sufficient types of these tools available to enable all branches of the industry to study them thoroughly with a view to increasing house building after the war?

Mr. Sandys: I will consider that.

Building Labour

Mr. Kirkwood: asked the Prime Minister if, in view of the changed conditions of the war and the increasing shortage of houses, particularly in Scotland, he is now prepared to reverse the Government's decision to stop all house building and give equal priority to house building in England and Scotland both as regards labour and materials as is given to the production of war material and the calling up of men for the fighting Services.

Mr. Attlee: A beginning has been made with the building of temporary houses and the permanent house building programme will be resumed as soon as the necessary labour, now required for essential war purposes, can be released. In the meantime the work of preparing sites is being pushed on rapidly.

Mr. Kirkwood: Arising from that reply, which is anything but satisfactory, I have asked in my Question if the Prime Minister is prepared to reverse the decision to stop all house building. I want to know the reply to that, because it is well known that we are right up against it in Scotland with regard to housing.

Mr. Attlee: House building has never entirely stopped in Scotland during the war. Thirty-five thousand houses have been completed since 1939, and there are 3,500 houses now under construction. The point is, as my hon. Friend knows very well, that it is a question of the available labour. He refers to the changed conditions of the war, but conditions are not changed as regards the demand for labour, which is at its peak just now.

Sir Irving Albery: With regard to labour, have any steps now been taken to bring back from other industries men who were originally in the building trade?

Mr. Attlee: That is a separate question, and perhaps my hon. Friend will put it down to the Minister of Labour.

Mr. Glenvil Hall: Does the original reply mean that steps will be taken to release men for this work?

Mr. Attlee: We cannot do more than deal with the labour situation as it is, and the needs of house building must be weighed against the urgent demands of the war. The urgent war demands must come first.

Mr. McKinlay: Is my right hon. Friend aware that there has been imposed on the building industry in Scotland something which holds back such houses as are being built? Will he take steps to have the Ministry of Works removed from Scotland bag and baggage and let them get on with the job themselves?

Oral Answers to Questions — HOUSE OF COMMONS CHAMBER (ACOUSTICS)

Mr. Keeling: asked the Minister of Works whether he intends to consult the building research station about the acoustics of the new House of Commons.

Mr. Sandys: Yes, Sir.

Oral Answers to Questions — GENERAL FRANCO (LETTER TO PRIME MINISTER)

Mr. G. Strauss: asked the Prime Minister whether he will publish the text of the letter addressed by General Franco to him, in November; and his reply.

Mr. Attlee: No, Sir. It would be contrary to established usage to make these confidential exchanges public.

Mr. Strauss: Unless this correspondence contains matters affecting security, is not such correspondence between heads of States a matter of public concern and interest and cannot my right hon. Friend, therefore, publish these documents?

Mr. Attlee: The Prime Minister is not head of the State, and it is not the practice to publish these communications.

Mr. Pritt: Why is the Press allowed to publish apparently authoritative and inspired versions of some of the things in some of the letters, and, in these circumstances, is it not better that this great nation should know the truth of what they are up against, and be allowed to see the documents?

Mr. Attlee: I am not responsible for the Press.

Oral Answers to Questions — FOOD SUPPLIES

Poultry Feeding-stuffs

Dr. Little: asked the Minister of Food whether, in view of the necessity for more fresh eggs in the interest of the health of the people, he will encourage poultry keepers to enlarge their stocks by increasing still further the fowl ration.

The Minister of Food (Colonel Llewellin): I have nothing to add to the reply that I gave to my hon. Friend on 6th December last.

Dr. Little: Does my right hon. and gallant Friend not think that everything possible should be done to increase the fowl population of the country, which has been so largely depleted, and more especially owing to the urgent demand by the people for more home-produced fresh eggs?

Colonel Llewellin: Yes, Sir, certainly.

Viscountess Astor: Is it not true that many soldiers would rather have a fried egg regularly than a glass of beer?

Potatoes (Northern Ireland)

Dr. Little: asked the Minister of Food whether he will make known at the earliest moment the increased price to be fixed for potatoes from Northern Ireland owing to the loss incurred by the wet season and other unfavourable circumstances over which farmers had no control.

Colonel Llewellin: I would refer my hon. Friend to the reply given to him on 16th November, 1944.

Dr. Little: Does not my right hon. and gallant Friend recognise that growers of potatoes should receive an adequate return on the costs of production and the labour involved, as they are not having that now?

Colonel Llewellin: The prices of potatoes were fixed earlier in the year and a rise is due to-morrow.

Dr. Little: Does not my right hon. and gallant Friend recognise that since the price was fixed there has been a serious loss through frost and wet weather?

Cereals (Use)

Dr. Little: asked the Minister of Food the amount of cereals now assigned to distillers for the production of alcoholic liquor; and what relation this bears to the amount given to the brewers and that used for the food of the people.

Colonel Llewellin: The percentages of utilisation during 1944–45 of all cereals for distilling, brewing and food are 0·9 per cent., 7·2 per cent. and 91·9 per cent., respectively.

Viscountess Astor: What does that mean?

Dr. Little: Does not my right hon. and gallant Friend agree that a further assignment of cereals for foodstuffs would be a great advantage to the country?

Colonel Llewellin: What it means is that 92 per cent. does go for food.

Viscountess Astor: How much goes for drink?

Colonel Llewellin: If I may do my hon. Friend's arithmetic for her, it is 8 per cent.

Oranges

Mr. Purbrick: asked the Minister of Food, in view of the great number of


oranges that have gone bad out of the consignments recently received owing to the embargo on retailers disposing of them before a certain date, if he will remove this and so save this waste of valuable food.

Colonel Llewellin: No embargo has been imposed on retailers by my Department. In some cases local distribution committees have asked retailers to commence sales simultaneously, but the delay in any case is short, and could have no effect on the condition of the fruit. I have received no evidence that these arrangements have caused waste.

Mr. Purbrick: In view of the fact that the Department has a large number of inspectors, could not some inquiries be made, because the waste seems general? Surely the Department ought to be capable of re-organising itself so as to end this waste?

Colonel Llewellin: I am afraid such waste as there is in these oranges is largely because of the conditions under which we have to transport them to this country at the present time.

Mr. Evelyn Walkden: Why did the Minister display such enthusiasm in bringing thousands of cases of Seville oranges here, when they are now rotting in the shops because people have not the sugar with which to make the marmalade?

Colonel Llewellin: The supplies of these bitter oranges will work out at only about 1 lb. per family of four persons. I believe that the concession by which people were allowed to take sugar instead of jam allows a large number of people to make that extra marmalade at home which they very much welcome.

Mr. E. Walkden: The Minister can see what is happening in the shops.

Mr. Pritt: Does not the Minister know from the reports he has that a lot of these bitter oranges are rotting in the shops because, rightly or wrongly, people think that they have not the sugar? Could he not do something by handing the oranges over to marmalade makers?

Colonel Llewellin: I can assure my hon. and learned Friend that we are supplying the full requirements of the marmalade factories for these bitter oranges. It is

the residue that is going into the shops for individuals.

Mr. Pritt: It is the residue that is rotting.

Mrs. Hardie: Is there not something wrong with the distribution of oranges? In some districts we cannot get any.

Colonel Llewellin: Oranges are difficult things, because they will not keep and they have to be distributed as quickly as possible. We do try to distribute them evenly over the country and we hold them in the shops for five days for anybody who has not already had his ration book marked. We are doing our best. A very large percentage of the oranges are getting to people in good condition and are very much welcomed.

Mr. Turton: Would the Minister bear in mind that if these bitter oranges are not wanted in the South, they are required in the North of England?

Viscountess Astor: Question.

White Fish (Prices)

Mr. Henderson Stewart: asked the Minister of Food what action he is taking in response to the protest from the Scottish Inshore Fishermen's Association against the proposed reduction of prices of white fish during the summer months.

Colonel Llewellin: I shall give careful consideration to the representations of the Scottish Inshore Fishermen's Association.

Mr. Stewart: In the interests of these people would not the right hon. and gallant Gentleman consider postponing action until he has considered the representations?

Colonel Llewellin: Oh, yes, that is what I meant. We did invite them to come to a meeting, but unfortunately they did not came. If they should wish to send delegates within the next week we shall be delighted to see them and to discuss matters with them.

Sweets (Stocks)

Mr. Rostron Duckworth: asked the Minister of Food the reasons for the decrease in sweet stocks.

Colonel Llewellin: There has been no decrease in aggregate sweet stocks. If my hon. Friend has any particular instance


in mind and will send me particulars I will be glad to have the case investigated.

Mr. Duckworth: In view of the acknowledged fruit content of this product, can the right hon. and gallant Gentleman hold out any hope of a larger supply of raw materials in the near future?

Colonel Llewellin: No, Sir, not in the near future, I am afraid.

Poultry and Rabbits (Black Market)

Mr. Stourton: asked the Minister of Food if he proposes to act on the motion passed by the National Federation of Meat Traders' Association at its annual conference held recently in London, urging the Ministry to revoke the Poultry and Rabbits (Maximum Prices) Orders, as a measure to release the grip of the black market on the trade.

Colonel Llewellin: No, Sir.

Mr. Stourton: Is my right hon. Friend aware that, at the conference referred to, representing 45,000 butchers, it was alleged, and not denied, that practically 100 per cent. of English poultry goes through the black market? Is he also aware that I can give him the name of the proprietor of a chain of 35 shops in London who has not sold a single head of English poultry since these Orders were made? And will he state why he persists in his obstinate attitude in face of this evidence from the trade?

Colonel Llewellin: What I was asked to do was to repeal the Maximum Prices Order for poultry, and my answer was that I did not intend to do it. There is a small black market in poultry, as I told my hon. Friend before, and it is not nearly as large as he makes out. We try to investigate every case we hear of, and we prosecute where we can.

Mr. Stourton: Is not the Minister aware that what he has said to me now is flying in the face of all the evidence from the trade? Owing to the unsatisfactory nature of the reply, I beg to give notice that I will raise this matter on the Adjournment.

CIVIL BUILDING WORK (LICENSING LIMIT)

Mr. Sandys: With the permission of the House, Sir, I should like to take this opportunity to make a statement. As the

House knows, over the country as a whole a licence has to be obtained to carry out civil building work costing more than £100. However, it was decided last October to reduce this limit from £100 to £10 in the London Civil Defence Region so as to enable our available building resources to be concentrated upon bomb damage repairs. This arrangement has proved most effective in preventing less essential work being undertaken and has resulted in valuable economies of labour and materials.
In order to bring in additional contractors with their men to speed up these repairs, I propose to extend the £10 licensing limit to certain areas immediately outside the region which are within reasonable daily travelling distance of London. At the same time the limit will also be introduced along some parts of the South and East coasts, including the areas which have become known as "Bomb Alley" where numerous houses as well as farm buildings are in urgent need of repair. The areas to be included are the counties of Essex, Kent and Surrey, together with parts of Sussex, Berkshire, Buckinghamshire, Bedfordshire, Hampshire, Oxfordshire and Hertfordshire.
As in London, the responsibility for issuing licences for work costing more than £10 and less than £100 will rest with local authorities. The Order will be issued to-day, and will come into operation on Monday, 5th February. The local authorities concerned, through their Associations, have been consulted and the Government have been assured of their full co-operation in working this new arrangement.

PERSONAL STATEMENT

Mr. Stokes: With your permission, Mr. Speaker, and by leave of the House, I wish to make a short personal statement by way of explanation. On 17th January, in reply to a question, the Secretary of State for Air quoted from the report of a speech I made in Cairo to members of the Royal Air Force on 1st December last. In his reply the Secretary of State stated that the speech lasted for over one hour, arousing increasing resentment and widespread disappointment. He has been good enough to supply me with a copy of the report. It consists of a single sheet of paper, containing one correct and four distorted extracts from my speech.
I received a letter, written at the direction of the officer commanding the station, in which it is stated that no complaints had reached him from anyone on the station and that, as far as he knows, no exception was taken to any of my remarks. I wish to assure hon. and right hon. Members of this House that on no occasion did I refer to the House of Commons as "a lunatic asylum." The troops to whom the Secretary of State referred as being "liable to enter into battle at any time," were members of the Base Accounts Depot, R.A.F., Middle East. I am glad to have this opportunity of correcting a false impression, and the delay in doing so has been due to the time it takes to communicate with Cairo.

Sir A. Sinclair: I must say that I do not think I gave the House a false impression. Even men serving at the Base Accounts Depot are combatants and may be posted away at any time and have to fight. As for the speech, I quoted from memory in reply to the third question which the hon. Gentleman asked me on that occasion, but I have since had corroboration for the extracts I made from Royal Air Force sources, supplied on the authority of two men who were present and took notes at the time.

Mr. Buchanan: Could I ask you, Mr. Speaker, whether you have not any influence with Cabinet Ministers to ensure that if they are going to do anything they do it decently and generously?

Orders of the Day — EXPORT GUARANTEES BILL

Order for Second Reading read.

12.7 p.m.

The President of the Board of Trade (Mr. Dalton): I beg to move, "That the Bill be now read a Second time."
I think the House will agree that this is a simple and useful Measure for the encouragement of post-war exports. What the Bill does in the first Clause is to increase from £75,000,000 to £200,000,000 the limit of liability laid down in the Export Guarantees Act, 1939, and within that maximum the subsidiary limits of £7,500,000 for re-exports and of £2,500,000 for ancillary services connected with the export trade, are both doubled. I have read in certain organs of the Press calculations designed to prove that, in effect, and in terms of goods covered, this is no increase at all, and I, therefore, think it may be worth while to submit a very simple piece of arithmetic to the House. At the present time prices of United Kingdom exports are, roughly, double the pre-war level, and therefore the £75,000,000 which we are proposing to


increase, is equivalent, at present prices of exports, to £150,000,000. On this basis the increase is from £150,000,000 to £200,000,000, that is to say, an increase on £150,000,000 of £50,000,000. In other words, an increase of 33⅓ per cent.

Mr. Stokes: On the original?

Mr. Dalton: If my hon. Friend has not followed me perhaps he will read my arithmetic in HANSARD, I am sure he will find it lucid and correct. Therefore, in terms of goods, as distinct from money, the Bill provides for an increase of 33⅓ per cent. at present export prices. But there is no reason to suppose that present export prices will remain at their high level in the years to come. I myself anticipate that there will be a gradual decline in the prices of British exports from the level now ruling. In so far as that anticipation turns out to be correct, the increase in terms of goods covered will be greater than 33⅓ per cent. Moreover, at the present time, the liabilities covered amount not to £,75,000,000, which is the present legal limit, but only to £40,500,000. This, as the House will readily appreciate is owing to our exports having been so substantially reduced because of the war, and in consequence of Lend-Lease receipts, with the result that it has not been necessary to employ the export guarantees to the maximum extent permissible under the present Act, Therefore, in addition to the increase now proposed, there is a "slack" of between £34,000,000 and £35,000,000 within the £75,000,000, which is now the legal maximum. I think that when we take account of these considerations, the maximum I am asking the House to assent to will be sufficient to cover an increase of at least 50 per cent. in the volume of our exports over the pre-war figure, which is, roughly, the target which has been set before industry and the country on various occasions.
I would add that if it should turn out, as we go forward, that this figure is insufficient, the Government will be perfectly prepared, if the case is established and we find ourselves rapidly approaching this new ceiling of £200,000,000, to consider whether a further increase should not be effected. That can be done in the simplest fashion, by means of a one-Clause Bill substituting for the £200,000,000 in this Bill some larger figure. Clause 1 is the main operative Clause—

Mr. Pritt: Would it disturb the right hon. Gentleman if I asked him a question? One of the elements in the kind of guarantees given—because this is something like a revolving credit—is what has been called the rate of turnover. Has he taken that into consideration? Will it be slower or quicker after the war? It might make his figures a good deal better, or a little worse.

Mr. Dalton: For the purpose of this calculation, I have assumed that there is no change in the rate of turnover. That will depend on the character of the goods in respect of which credits are given—what proportion consists of capital goods or consumer goods. Broadly speaking, in respect of consumer goods credits are usually given for six months, and with regard to capital goods for from three to five years. The rate of turnover will, therefore, depend on the proportion of capital to consumer goods and the proportion of capital goods falling into the three-year or five-year credit group in the future. I have assumed provisionally that there is no change in that. I repeat—because this is an important point—the Government do not at all regard the £200,000,000 as a final figure, and if a case can be established, and we find that these credits are being used up too rapidly, we are quite prepared to consider whether there should not be an increase by the very simple means I have mentioned. So much for Clause 1, which is the main Clause of the Bill. My right hon. Friend the Secretary of the Department of Overseas Trade will reply at the end of this Debate on matters of detail. I think it will be more convenient if answers to matters of detail can be postponed until then. Otherwise it will take too long for the House to express its views. I shall be perfectly happy, of course, to answer questions, but I think the course I have indicated will be more convenient.
Clause 2 is new. It has been put in on the advice of our Export Guarantees Advisory Council, about which I will say a word in a moment. For the first time, it extends the range of guarantees to the sale of primary products produced overseas and sold direct by United Kingdom merchants without coming to the United Kingdom itself. As the House knows, London is the traditional centre for much of such business, and, if in future such transactions are not financed in London,


they will be financed somewhere else overseas. This would mean that we should lose a certain amount of invisible exports with a consequential loss of foreign exchange. We are very anxious not to lose foreign exchange needlessly in the years to come and, therefore, this new permissive Clause has been inserted. It will, however, be used with great discretion. Each case will be considered on its merits, and in no case will guarantees be given under this Clause if it should be the opinion of the Advisory Council or of Ministers at the Board of Trade that British visible exports would in any way be hindered or damaged by such guarantees. But wisely used this is, I think, a valuable extension of the field of export guarantees.
This is no new plan which I am submitting, it is new only in respect of details, for the principle of export credits, with the Government standing behind the exporter, dated back to 1919. The first export credits scheme was introduced in that year, and since then there has been a long series of amending Acts, eight or nine of them, and this is one more in the series. We are now going one step further in order to make sure that our export trade in the post-war years shall not be handicapped through lack of reasonable credits. But I think it is necessary that I should say one word of caution about credits and their use. We cannot live on credit alone, no one can; we must get paid for what we produce. I hope no one will bemuse himself with the belief that the prosperity of this country can be restored merely by large scale credit operations for the benefit of those who have the advantage of receiving the products of British industry. The purpose of exports is not fun, it is not to send away goods merely for the sake of sendng them away—goods on which British labour has toiled and sweated—in order that other people may enjoy them. It would be very foolish indeed to contemplate export trade on that basis.
There is only one justification for exports and that is that it is more useful to send away the things we have made in exchange for other things we need rather than to keep them here. The purpose of our export trade is to obtain the food without which our people cannot be properly nourished and to obtain the raw materials without which they cannot be

fully employed. That is the sole purpose and we want the food and the materials soon. We do not want to-morrow's breakfast postponed for three or even for five years. It is very nice to send things away on the understanding that three or five years hence we shall get paid for them and get foreign exchange to buy our food, but there must be a limit to this operation, and I am sure the House will keep that consideration in mind.
Before the first world war, and still to some extent between the wars, we were what was called a creditor country, but as a result of the sacrifices we have made during this war we shall be a debtor country at the end of it in the sense that a large number of persons and Governments outside this country will have claims upon us in the form of sterling balances and the like. Therefore we must keep a sharp eye upon the total volume of credits, particularly long-term credits, or we shall find ourselves working for a rather distant future, and all the advantages of British labour at work now being devoted to getting imports not now but years hence. Having said that, and it is important that it should be said and understood, it remains true, for otherwise I should not be moving this Bill, that there are many cases where the Government should rightly come in in order to make sure that certain exports can proceed and that certain orders can be completed, where without this Government credit, that might not be possible.
I said just now that I would say a word about the Export Guarantees Advisory Council. This is a body which meets regularly and advises us on each of these transactions. The Council includes representatives of banking, of industry, including the co-operative movement, and of organised labour. Its services have been of very great value to the Government and I want to take this opportunity of thanking its members for the work they have done. It is convenient, indeed it is essential, that there should stand, as part of the mechanism of a Bill of this kind, some body of experienced people who can be a sieve between the applications which may be made for guarantees and the Ministers who have to justify the guarantees if need be, in this House.

Mr. R. C. Morrison: Could the right hon. Gentleman


now or later say something about the time which this Advisory Council and the other Departments take in deciding upon an application?

Mr. Dalton: I will leave that to my right hon. Friend who is to reply to the Debate, if I may. The Council deal with matters as quickly as they can.

Sir Patrick Hannon: I am sorry to interrupt, but does my right hon. Friend contemplate the continuity of the existing Advisory Council with the same personnel without any modification?

Mr. Dalton: Substantially the same personnel. We may vary the membership of the Council from time to time, but substantially the same people will continue to serve on it. I think it would be better if I were allowed to proceed, leaving points of detail to be answered by my right hon. Friend at the end of the Debate. We have had a good body of people on the Advisory Council and they will certainly continue their work as a Council, and although changes may be made from time to time in the personnel I hope that the majority of them will go on. It is worth observing that over the period during which this Government support of exports by way of guarantees has extended, the receipts from the premiums have always been sufficient to cover the expenditure of the Department, and that for the whole period of more than 20 years since guarantees were first given no charge has fallen upon the Exchequer. The Financial Secretary to the Treasury is not here for the moment or I think he would blush with pleasure. The premiums charged for these credits, although they have in my opinion been reasonable, have none the less been sufficient to cover the claims which have had to be met.

Mr. Benson: Does that include the Rumanian smash?

Mr. Dalton: It includes everything. I am totalling things up. Taking one thing with another the receipts from premiums have been sufficient to cover the expenditure. This includes one or two smashes, but these have been set off by a large number of cases where there has been no smash. The accounts will shortly be in the hands of the House—they are now with the printers—but, since the Bill is

before us, perhaps I may give a figure a little in advance of publication. When the annual volume of Trading Accounts and Balance Sheets is issued by the Stationery Office for the year ending 31st March, 1944—and that will be very soon—it will be seen that there is still a reserve of approximately £1,500,000 against the liabilities so far entered into, and, as I have already said in another connection, although the limit of guarantees under the present Act is £75,000,000 the Department's present liabilities are only £40,500,000, owing to the lesser requests for these facilities which have been made during the war. When we restart our export drive there is no doubt that these liabilities will, as it is intended that they shall, quickly grow.
My right hon. Friend the Secretary of the Department of Overseas Trade is specially charged with the administration of the Export Credits Guarantee Department, subject to his joint responsibility to the Foreign Secretary and to myself. He has devoted a great deal of time and care to the work—I am glad to tell that to the House—and I think that it has proved a very satisfactory piece of machinery, although it has not been used to the full during these war years. It has been of great value in the past, and it is because we are now within sight of the end of the war and within sight of the period when the export drive must be resumed with vigour if we are to get our food and raw materials, that it appeared to the Government that the time had come to increase the limit of liability and to introduce this Bill. Therefore, I commend this Bill to the House as a practical Measure for the rather tricky period, as it will be, of transition from war to peace, for the support and encouragement of British exports.

12.26 p.m.

Sir Patrick Hannon: I congratulate my right hon. Friend upon the introduction of this Bill, and I am sure the House will have been glad to hear from him that the work of the Secretary of the Department of Overseas Trade has been sedulously prosecuted and has kept him busily occupied for a long time. That may be news to the House of Commons, but we are glad to know that a period of apparent quietude has been utilised for the production of the policy which is embodied in the struc-


ture of this Bill. My right hon. Friend the President of the Board of Trade has himself given much thought and time to all the complex questions which are involved in the preparations for the post-war reconstitution of the marketing facilities of this country abroad. During the war we have been faced with the greatest decline in our history in the marketing influence of this country. Our exports have fallen to something like 35 per cent in volume as compared with the figures for 1938, and this problem is certainly one of the most pressing with which His Majesty's Government have to deal, because it will influence the whole of our economic life in the future. I would instance particularly the situation which has arisen in South America. I happen to have some quasi-official association with South American trade. During the war we have practically lost the whole of our South American export trade. Nobody has realised that more, I think, than my right hon. Friend the President of the Board of Trade, and from time to time he has, for several months past, given those concerned with the re-establishment of South American trade every opportunity to put forward their views on the possibility of a rehabilitation policy for our exports to South America.
We in this country have over a period of time and for the purpose of economic development in South America invested in that series of republics extending from Mexico to Patagonia something like £1,000,000,000, and of that sum something like £450,000,000 has never paid a penny of interest. That is a situation which, if I may say so respectfully to the President of the Board of Trade and to His Majesty's Administration as a whole, cannot be allowed to continue. That is an ill-balanced situation in relation to our foreign trade, and some steps must be taken to put it on a better footing in the future. I would impress upon the President that the sooner he can make it clear to manufacturers in this country that the embarrassments of Lend-Lease to which we have been subjected for many months past are removed, consistent with the exigencies of the war, the better it will be. Our manufacturers cannot go on in the present situation. For instance, an order for some electrical machinery will come to a Birmingham manufacturer from a customer in South America, but that order cannot

be filled without the permission of the United States Government. In that way, as my right hon. Friend knows, we have been deprived of an immense volume of trade. Nobody, I am sure, realises more than he does the difficulty of considering matters of that kind in their application to our trade relations in future.
The same thing may he said of the Colonial Empire, where the American—and we do not take exception to it—is now pushing his wares, at the expense of our own markets. Action has been taken with cumulative effect by American industrialists for the sale of their wares in countries where they have had no market for them. The Bill does indicate that the Board of Trade is alive to the situation, and the House will be grateful to the President of the Board of Trade for the information he has given of the desire of the Government to deal, in the broadest and most helpful manner, with all these problems which concern our export trade. My right hon. Friend knows very well that because of the difficulty of shipping, and the difficulties arising out of currency relationships between the South American people and ourselves, we have to suffer all these stresses and strains during the war, but I hope he will keep in mind the possibility of making use, for the purpose of the expansion of British export trade, of all the accumulated balances which have arisen in practically every South American republic and indeed in India. The President of the Board of Trade has an opportunity of exercising all the gifts and wise statesmanship he possesses in dealing with this outlet for British export trade.
I consider this one of the most important Debates we have had in the House of Commons for a long time. The whole industrial community for months past have been uncomfortable and unhappy about the future outlook of our export trade. I suggest that the sums indicated in this Bill are comparatively small for the purposes they are intended to accomplish. They ought to be larger, because of the rise in price levels, and because of the cost of different factors linked with the production of articles, and the whole situation has been altered vis à vis foreign competition. While we appreciate what the President of the Board of Trade contemplates doing, and has tried to do in the preparatory work


up to the present, he and His Majesty's Government must endeavour, by all the machinery under their control, to establish a friendly understanding in relation to world economy with the United States. Unless we can work with the United States in future I can see a hopeless outlook for many industries in this country. We have every right to expect consideration from the United States in relation to our export trade.
Not the least of the lines of policy to be pursued with respect to the export trade is the cultivation of reciprocal arrangements with the United States, and, at the same time, I hope, the maintenance of the friendly understanding which was established before the war under the Ottawa Resolutions with the constituent parts of our own Empire. I hope that, in the future outlook of British trade, the Ottawa Resolutions, at all events in substance, will continue to be part of our national policy. I hope that the President of the Board of Trade will, in those circumstances, concentrate on a friendly understanding with the United States. They have a great deal they can give us, and we have a great deal we can give them, and by working together in future, in many directions, the united intelligence, genius and inventive and organising power of these two countries, can play a great part in bringing about a happier and better state of affairs.

12.35 p.m.

Mr. Ellis Smith: Seven years ago I welcomed the introduction of the present Act. Those of us who were engaged in the heavy industries between the two wars realise that many of our fellow-workers would have been subject to more unemployment and more short time, had it not been for the facilities contained in earlier measures similar to the Bill which is before us to-day. We must remember that the present Bill only facilitates exports. It does not in itself produce orders. If the Bill is intended as a small contribution within very narrow limits to a new economic policy, then, it is to be welcomed. Its purpose is to amend the Export Guarantees Act, 1939, in order to give guarantees in connection with the export from the United Kingdom of goods to any country.
The first question I would ask the Minister is one to which I would like an

unequivocal answer. Can cover be given under this Bill to sales made by foreign subsidiary companies? If so, which were the chief British parent companies involved before the war? Were any of the subsidiary companies operating directly or indirectly in Germany, Italy or Japan? I would like an answer to these questions to-day, because some of us are seriously concerned about certain things for which Parliament was responsible before the war. We have been pressing for discussion of these arrangements in this House, but up to now we have not been successful in getting the Government to agree to a Debate.
The Advisory Council was constituted for the purpose of giving guarantees in connection with the export from the United Kingdom of goods to any country. Ours is a great industrial country and, therefore, no matter what our views are Politically, we must be concerned about our export trade. Our party and our movement are perhaps more concerned about the export trade of this country than any other section of the community. We realise that exports must be given priority. But trade is not one-way traffic. I would ask then, has consideration been given to operating trade facilities within the British Commonwealth? The United States of America assist all their own States, and the Union of Soviet Socialist Republics assist—and will assist more than ever after this war—all their constituent States. Therefore, should not we bring about a similar arrangement within the Commonwealth? All the talk about improving the economic position of the Commonwealth, in the abstract, is not an atom of good, unless we make concrete proposals for uniting the Commonwealth on an economic basis. Surely the time has arrived for abstract expressions given in this House to take concrete form, and, trade being reciprocal, it would be to the material advantage of all States in the Commonwealth, that this Bill should be changed during the Committee stage so as to enable us to cover the whole of the Commonwealth.

Sir P. Hannon: Is the hon. Member aware that under the Ottawa Resolutions, the Dominions and the Home country have an understanding of a permanent character, which realises the point he is now making in his speech?

Mr. Smith: It would cause a serious digression in the observations I want to make—and time is very limited—to take up this point, but if the hon. Member would be good enough to go into the matter, he would see that we have not the same kind of arrangement as the arrangements to which I refer in America and Russia. We are so concerned about the position of our exports after the war that we are glad this Bill has been introduced, so that it may be possible for the arrangements about which I am speaking to be applied throughout the Commonwealth. The Bill states:
The guarantees are given to exporters in return for a premium, and afford protection against the main risks of overseas trading.
How do the premiums compare with those charged by private companies? Clause 1 increases the maximum amount of the Board's liability at any time, in respect of the guarantees, from £75,000,000 to £200,000,000, and to a certain extent the President of the Board of Trade has dealt with that point. The Clause goes on to extend
the power to give guarantees to cover contracts for constructional work abroad.
Will that apply to power-houses, and civil engineering in general? The productive capacity of our industries and of civil engineering has increased enormously during the war. British civil engineering is now in a position to carry out as large contracts as that of any other country in the world. Therefore, we would like more information upon that point. The Explanatory and Financial Memorandum also states:
Clause 2 empowers the Board of Trade to give guarantees in connection with sales of goods by United Kingdom merchants for shipment directly between countries overseas.
Does this mean that the merchant barons refuse to do this kind of work? Can advances be made to merchants in need of extra capital under Clause 2, or under any other part of this Bill? The Bill lays down that the liability of the Board of Trade in respect of new guarantees is not to exceed £15,000,000. Upon what basis has that £15,000,000 maximum been fixed? Many parts of Russia and China will be in a devastated condition after this war. India is still undeveloped. That, in itself, is an indictment against all those who have been responsible for governing India in the past, because India has been held back. Many parts

of Europe will still be devastated and undeveloped, and their priority requirement, in order to enable them to rehabilitate themselves, will be fixed capital. Are we satisfied that the £15,000,000 will be sufficient, when it is considered that the capital required will be mostly for powerhouses, civil engineering and agricultural mechanisation?
The President of the Board of Trade said that he was satisfied with the functioning of the Export Guarantees Advisory Council. Is he satisfied that decisions are arrived at with sufficient speed, and that certain concerns in the past have not almost lost large contracts, because of the slowness of the Guarantees Advisory Council, in coming to a decision? I have in mind, in particular, one of the largest establishments in this country responsible for employing probably more workpeople than any other concern. They almost lost a contract because of the slowness of the Export Guarantees Advisory Council. We would like some assurance to-day that that question will be looked into. Will my right hon. Friend also consider broadening the basis of the Council, and bringing in people who may not have been to certain colleges and may not have had the opportunities to develop themselves in the same way as better-placed people? There are thousands of people in our country now who have taken advantage of the educational facilities that are open to the average trade unionist. These people can hold their own in matters of this kind with most other people, and we think that these committees should be broadened in order that ordinary people can have a greater opportunity of making their contribution in these matters in the future.
The President of the Board of Trade stated that the accounts would be published within a few weeks. One would have thought that the Department would have got very busy during the past few weeks to provide the House with these accounts. The Department must have known for some time that it would have been advantageous if we could have had these accounts before us to-day in considering this Bill.
Up to now, I have been referring, in the main, to what is in the Bill. Within those limits, we welcome its introduction and we shall facilitate its passage. I want


to make some observations, however, about what should have been in the Bill and why the Measure should have been of a more comprehensive character. I have read, during the past year or two, many reports published by representative organisations on these problems, and I have read articles and books on world trade. Like most hon. Members, I have given a good deal of thought to our post-war economic problems, and I have come to these conclusions, first, that there is no denying the main facts, and secondly, that we should adopt a policy to enable us to increase the volume and value of our export trade. We want to increase our standard of living and the standard of living throughout the world. We desire to make our contribution towards the solution of mankind's economic problems.
If we have reached agreement upon the main essentials, then our task is to manufacture a machine that will enable us to deal with these problems. Between the two wars, world trade was restricted, and this country, along with others, had some responsibility for that restriction. The time has now arrived, in our view, when Britain should take the initiative and adopt a policy that will lend itself to liberating trade, first, within the British Commonwealth itself; secondly, by clearing arrangements based upon agreements for trade with any country that is prepared to co-operate with us; and, thirdly, by making it clear to the world that, in the adoption of this policy, we are working towards an international policy of economic co-operation.
It is now admitted by most people that we have to raise the standard of living throughout the world, promote the development of backward areas and organise effectively international co-operation. In my view, the Government are approaching our post-war export problems, in the same way that pre-1940 Governments approached the rearmament problem. It is time the Government mobilised the credit of this country, ready for the termination of hostilities. Our industrial capacity will be greater than ever. It can, and should, be still further increased. Anyone who reads the reports of inquiries into the cotton industry, the steel industry, engineering and shipbuilding, must be concerned about the position of these industries. In spite of that concern, let us admit that productive

capacity has been enormously increased during this war. [An HON. MEMBER: "Coal."] My hon. Friend reminds me of coal. We are not dealing with that subject now, but I will readily apply what I have said to the coal industry as well. The skill of our people is greater than ever. Our country can become greater than ever, if the Government mobilise in preparation for peace in the same way as they have done for war, and in my view the Government are not doing that.
If the volume of our exports exceeds the 1938 level by 50 per cent., if average prices are to be about 50 per cent. above that level, then, according to my calculations, the total value of our exports would be £1,200,000,000. The problem will not be one of production. The war has proved that. The main problem will be—and I want to emphasise this with all the force that I can command—how the countries that desire to receive our exports are to pay for them. How are they to pay for goods that they will urgently require? This means that, just as we had to adapt ourselves to make the mighty contribution that we have made in the world battle for freedom, so we have to adapt our economic policy, to enable us to face the problems of the post-war situation.
That brings me to some constructive proposals. For a hundred years, in this country, our trade has been the centre of controversy between Free Trade, on one hand, and Tariff Reform, on the other. Our trade should be taken out of the realms of controversy. We can no longer afford the scramble for markets that took place prior to this war. The scramble for markets leads to slumps, to friction, and, ultimately, to war. We should have a positive policy to maximise our trade by an organised systematic effort upon a planned economic, co-operative basis. During the war, 300 export groups have been formed, and the Secretary for the Overseas Trade Department has some responsibility for this. This, in itself, is not very encouraging. I would like to see more drive put into these preparations, in the same way that we have had to put drive into our prosecution of the war.
These export groups should be linked together in harmonious co-operation, and we should set up a British trading corporation, which would accept responsibility for exports and imports, including the responsibilities of the Board of Trade,


the Overseas Trade Department and the Export Credit Department. A trading organisation of the kind which I am suggesting should be set up from the converted Ministry of Production. It should be converted into a Ministry of Resources and Development. With a State trading corporation of this kind, we would see the end, so far as this country is concerned, of the fiscal controversy. It would bring about the elimination of the large amount of unnecessary overlapping that takes place. We can no longer afford the thousands of individual decisions made from the point of view of how it will affect one particular concern or industry. The time has arrived when the overriding consideration should be: How will this decision affect the national interest, not the interests of one firm? If this is accepted, then finance should be handled in relation to production and trade. Why is there no arrangement for the provision of credit in this Bill? May we have an answer to that?

Mr. Harcourt Johnstone: (Secretary, Overseas Trade Department): There is. That is the whole thing.

Mr. Smith: The right hon. Gentleman says that it is in the Bill. Will he explain how this Bill makes provision for credit? I understand that the United States Export and Import Bank has already lent £250,000,000 and not lost one penny. Will the right hon. Gentleman reply to this point and explain why our Government are not taking steps to provide credit facilities on the same basis? Already, even Conservative Ministers have made statements, in which they have accepted responsibility for a large amount of bulk buying after this war, and for giving guaranteed prices to agricultural producers and other people who have to accept responsibility for the maintenance of our food supply. Should not the next logical step be to organise, also, bulk selling? I am trying to outline and erect a framework that will enable us to carry out that proposal.
According to "The Daily Herald" of last Saturday, Russia is reported to be seeking a long-term reconstruction loan from the United States of £1,500,000,000, at low interest, to buy industrial equipment. The Soviets have placed orders with American engineering firms to restore the large Dnieper dam. If this

report is correct, I want to ask where we come in. The British workers, and especially those in the engineering industry, have been the best friends of Russia since 1917, and never again should British engineers, in particular, and others, be allowed to remain unemployed while other countries are giving out orders such as those which were given out after the last war. We can never forget—for we are still smarting under it—that London finance financed German industry and enabled German industry to secure the orders from Russia while our men signed on at the employment exchanges. London finance preferred to finance German industry, rather than British industry to enable it to obtain the orders that were being given out by Russia at that time. The House need not accept this statement only from a Socialist. Well might Sir Allan Smith and two manufacturers from Birmingham, whose names I forget, and Mr. Garvin, write the critical articles and make the statements which they made on the policy pursued between 1927 and 1930. What I am asking is—What are we doing with regard to this position? I have put question after question to the Board of Trade, and this is the answer I got yesterday from the Parliamentary Secretary:
I have nothing to add at the present to the answers previously given."—[OFFICIAL REPORT, 30th January, 1945, Vol. 407, c. 1289.]

Mr. Stokes: Most enlightening.

Mr. Smith: We read that this President of the American Chamber of Commerce has been to Russia and has been received with open arms, and has made preparations for a large amount of trade. Surely, it is reasonable to suggest that we should be prepared to offer to that mighty country at least the same facilities in regard to post-war trade as the Americans are offering. We are all pleased at the improved diplomatic relationships between the two countries, but these relationships need buttressing by economic arrangements.

Mr. Boothby: Does my hon. Friend really think that our financial position after the war will be exactly the same as that of the United States, and that we shall be in a position to offer the


same facilities as they will, to Russia or any other country?

Mr. Smith: My hon. Friend knows—no one better—that the Soviet Union contains resources within its boundaries greater than those of any other country in the world. He knows also that there are large supplies of timber there which Britain will require urgently for its housing programme after this war. He knows that we shall be able to take from Russia the large amount of timber we require, while in exchange for that timber, by an arrangement of the kind I am outlining, we can supply them with capital goods of the kind they will require so urgently. A question of that kind is an indication either that my hon. Friend is trying to cause a digression, or is just making an interjection not of a helpful kind.
In conclusion, let me make this quite plain. No bad debt has been incurred by any British trader who has traded with the Soviet Union since 1917. There will be an enormous demand from Russia after the war for capital and consumer goods. The credit terms fixed or offered by our country will, to a great extent, determine the volume of trade which will pass between the two countries. The chief criticisms by the U.S.S.R. and by British concerns of the Act before the war, were that the premiums were too high, and the loans provided were too short. What I am asking is that the Board of Trade should give consideration to the question I have raised. While as I say we will facilitate the passage of this Bill, we must have regard to its limitations, especially having in mind the new world in which we shall be living after the war. The House should give consideration to constructive proposals so that this country, in the post-war situation, can face its problems in the same way that we have faced our problems during the war.

1.2 p.m.

Sir Granville Gibson: I agree with what has been said by previous speakers to the effect that the matter which is being discussed in the House to-day is of paramount importance, and that it will have an important bearing on the export trade of the future—probably to a far greater extent than the activities of the Export Credit Department in the past. Sometimes I ask myself whether the Board of Trade at the present

time is, really, actually interested in exports. I ask that question because only a few weeks ago a friend of mine told me that he had been speaking to an official from the Board of Trade who asked him if I was interested in export trade. My friend said, "Oh yes, 101 per cent." This official of the Board of Trade—a temporary official—said in reply, "Well, we rather think"—I do not know whom he meant by "we"—"you are making too much of this export trade talk". I should hesitate to believe that that can be true but listening to the appeals which have been made by the President of the Board of Trade himself, time after time, at that Table with regard to the necessity for increasing our export trade after the war, and realising how, on the other hand, the right hon. Gentleman's licensing department have refused to give the slightest assistance to export trade, I have wondered sometimes whether any of the protestations—

Mr. Johnstone: That is not my Department.

Sir G. Gibson: At any rate it is under the control of the right hon. Gentleman's Department.

Mr. Johnstone: No, it is not.

Mr. Dalton: I think it will be easier if it is assumed that I am responsible for everything, good or bad, that is done by the Board of Trade—that is the simplest assumption.

Sir G. Gibson: With regard to the Bill which is before the House to-day and the activities of the Export Credits Department, the question I want to put is: Does the Export Credits Department operate too much on a profit-paying basis? The President has stated that at the present time there is a balance in hand—to which he refers as "reserves" but, when all is said and done, they are profits—of about £1,500,000. I understand that at the beginning of the war they amounted to many millions of pounds, and I would like to ask whether any of these profits have been at any time handed over to the Treasury or the Exchequer, or have they all been kept within the confines and the control of the Export Credits Department?

Mr. Johnstone: To save the trouble of answering later, I can tell my hon. Friend now, that they are paid into the Treasury. The Treasury acts, as it were, as the


banker of the Department, but the reserves are still within the control of the Department, so that they can be called upon from the Treasury for the Department's use.

Sir G. Gibson: Oh yes, but has the total amount of reserves, or profits, been accumulated?

Mr. Johnstone: Yes.

Sir G. Gibson: Are they represented to-day by the £1,500,000?

Mr. Johnstone: Yes.

Sir G. Gibson: I saw in the paper the other day that £375,000,000 worth of trade had been covered in the past five years. I think this is a notable effort, which deserves commendation, but, of course, one must not overlook this fact, that in the early days of the life of the Export Credits Department, most of the trade was done with Russia, and I understand that in connection with that trade, very heavy premiums were paid, amounting in many cases to as much as 20 per cent. Apparently Russia was quite willing to pay those heavy premiums in those days when she was not as well off as she is to-day, when she had not become, as she has to-day, the second gold-producing country in the world and is winning £50,000,000 worth of gold from the soil of Russia year by year. What one must remember in connection with the work of the Export Credit Department is that the Department has always insisted that if a man wishes to cover a risk in any particular country, he must cover in every country with which he trades. In my opinion, that is a wrong policy to adopt. In the past, as I have stated, most of the trade in the early days of the Export Credits Department was with Russia and was done mostly in capital goods. In the main, I think, the Export Credits Department have not interested themselves particularly in consumer goods; they have been more interested in the five or six huge firms than in the hundreds and hundreds of small firms. In the future, however, the Department will have to pay more attention to looking after the interests and covering the risks of the hundreds of small firms, many of whom will come into the export market in post-war days for the first time in their lives.
I have a friend who is director of an engineering firm, and he told me that, a few years ago, his firm had £250,000 worth of orders on hand with Russia. His firm were quite prepared and satisfied to pay the premiums which were demanded in connection with that trade, but they might have taken a different point of view, if they had been doing foreign trade with any countries other than that one country. In my own case, I must admit that although I have desired many a time to cover trade with certain countries, because of the attitude of the Export Credits Department that, if you cover with one country, you must cover with all the countries with which you do business, my own firm has never covered possible risks in any country. Let me give a hypothetical case. Assume, for instance, that I am doing trade in Rumania and I ask the Export Credits Department to quote a premium. They quote 5 per cent., and assuming that my trade in Rumania is 2 per cent. of the whole of my foreign trade, and I am compelled to cover all my foreign trade, it would mean that the imposition of 5 per cent. on the trade with Rumania only would mean a cost in premiums, of 103 per cent., on the value of goods going into Rumania—apparently my right hon. Friend has not followed my line of argument so I will repeat it to make it more clear.
Assuming I am doing trade with a large number of foreign countries, and those countries are safe, I do not wish to cover for any of those, but I appeal to the Export Credits Department to cover me, for, say, Rumania. They quote me a premium of 5 per cent., I am compelled to cover for all the other safe countries and pay premiums on them—

Mr. Johnstone: I am sorry to interrupt my hon. Friend, but when the whole range of countries with which my hon. Friend is dealing are covered, the premium, which might be anything, for one of them not considered to be in a very high category, will, of course, be altered proportionately, according to the amount of business done with the first-class places.

Sir G. Gibson: I admit that, but my right hon. Friend has not yet seen the point I am trying to put before the House which is this: that though I have to pay


a premium of 5 per cent. on the trade I do in Rumania, for example, I am compelled to insure for all other countries where the trade is safe. If it so happens that the percentage of my total export trade in Rumania is only 2 per cent. of the whole, it means that the cost of premium charged over the whole range of my exports will be equivalent to 103 per cent. on the trade with Rumania only. That murders the opportunity of doing trade with Rumania. Is that really absolutely necessary in the future? The Board of Trade must become more up-to-date and change its mind on this point. If I cover my works for insurance, the assessor inspects room after room, he quotes a rate in respect of the risk of each particular room, and the premium is varied according to the danger of fire—or whatever it is for which it is covered—in each particular room. Why cannot the Export Credits Department do the same with their trade, quote different premiums according to the risk in different countries, and allow a firm to say, "I will insure in Rumania but I will not insure in South Africa," and so on? They will not do that.

Mr. Beverley Baxter: May I interrupt to ask a question for those of us who do not deal in such big figures and in such big enterprises? Let us assume that the hon. Gentleman wants to insure £100,000 worth of business spread over various countries, of which Rumania represents £1,000. Is it a fact that he will have to pay a premium on £100,000 worth of business in order to insure on the £1,000?

Sir G. Gibson: That is the policy, and I think it is an out-of-date policy. It is harmful to the export trade, and must be altered, if we are to do justice to our exporters and win the maximum amount of export trade in the future. I think hon. Members must be amazed at what I have just said about this state of affairs. I know that if I want to insure in this country against the danger of the bad debts of any particular firm, I can insure against it, but I am not compelled to insure against the bad debts of all my customers. I stated a moment ago that although my firm had desired to insure in one or two particular countries in years gone by, they have not done so for the reason that the burden imposed in compelling us to cover all countries was excessive.
One result of that policy was that a firm who are the agents of my firm in Canada, who wanted to insure against possible loss, were able to cover it over there. I could not cover from here because of the fact that if I covered that firm I knew that I must cover in every country where I had sound business, and knew there was no risk of loss.

Sir Frank Sanderson: Does my hon. Friend suggest that the Export Credits Department should insure all bad risks, and not insure any of the good risks? Is he not aware that where it is a case of insuring over the whole field the premium on that business is a mere fraction, and has no serious effect on the sale price of the goods that are exported?

Sir G. Gibson: I definitely hold the view that there should be varying rates of premium according to the danger of the risk. [HON. MEMBERS: "There are."] One should not be compelled to insure safe business. I remember discussing this matter with the manager of the Export Credits Department, and he told me that on a visit he had paid to Glasgow a Scotsman asked the same question which my hon. Friend has just asked me. He asked, "Do you want us to cover only safe business?" If it was all safe business there would not be any reason to cover, and the Export Credits Department is in being to cover business risks at a charge commensurate to those risks.

Mr. Silverman: If the hon. Member did that, would not the premium on the bad risks be proportionately higher?

Sir G. Gibson: Certainly it would be higher, but it would not be the same as if it were spread over the whole range of business. I have already given to the House the case of Russia. In the days when her financial status was not so strong as it is now, I am told that some of the rates were enormously high and that they were quite willing to pay those premiums because they knew they must have the good. There is only one sound policy on which the Export Credits Department can work, and that is to impose a rate of premium in any particular country which is commensurate to the risk which is being run.
There are several other points I would like to make. I would like my right hon.


Friend the Secretary to the Department of Overseas Trade to bring to the attention of the Export Credits Department the desirability of making the wording of their policies more understandable. It requires legal advice to elucidate the meanings of some of the Clauses in their policies. I do not suppose my hon. Friends here who are members of the legal profession will be pleased at that suggestion, but it really is difficult for a layman to understand the wording of these policies.

Mr. Silverman: Has the hon. Gentleman ever seen an insurance policy that was not?

Sir G. Gibson: I agree, but we ought to have as much simplification as possible. Some exporters are complaining that the limits of the amounts covered are too low. I know that the Department covers a limit of, say, £1,000 and that if a trader exports £2,000 worth of goods it is the last £1,000 which is covered by the Department. That is helpful, but in future, even although it means increasing premiums, greater risks must be taken and more cover given for higher limits. Exporters have been complaining that the limits fixed are too low to allow of any considerable amount of trade being done.

Mr. Johnstone: They do not know how much other business other people were doing with the same exporters.

Sir G. Gibson: That is so. Another complaint is about the long time it takes to get any status information. It does not necessarily follow that the capital in a firm has to be recognised as the only thing in the status of that firm. I have known firms which have not a great deal of capital whose standard of commercial morality has been exceedingly high, and I think it would be helpful if the Export Credits Department would see to it that firms could obtain status information more quickly, in order to assist exporters to do business abroad. There is no doubt that at the end of the war our financial position will be rather precarious. We shall be a debtor, instead of a creditor, country. It has been said often in this House that export trade is the life-blood of this country, but I do not apologise for saying it again, and I hope the House will allow me to read a few sentences from a speech made by a man whom I regarded

very highly—the late Sir Kingsley Wood. In the Debate on Economic Policy on 2nd February, 1943, he stated:
Too many people forget that we import much of what we need to maintain our standard of life and our manufacturing capacity. … Imports were paid for partly by the money we earned on shipping freights, the income derived from our investments abroad and a small sum for commission on various types of business. … We must, therefore, rely in the main upon a considerable expansion of exports. They are our life blood. Upon them will largely depend our standard of life after the war, and our future hopes and plans for the betterment of this country greatly rest upon them. … Unless, in fact, we can effect a great move forward in our export trade, our relatively high standard of living must inevitably fall. …—[OFFICIAL REPORT, 2nd February, 1943; Vol. 386, c. 817–818.]
Apart from discussion of export trade by business men, the subject does not seem to have interested the country very much. Yet this matter is vitally important, and indirectly touches the life of us all. Neither the Beveridge scheme, nor any other scheme of social services, can be run and paid for without it. The Government should pay attention to the important task of the closest collaboration between this country, the United States, Russia and China after the war. In a world conception of economic collaboration the Export Credits Department must play their part to the full, more fully than in the past, although they have done a splendid job and I would not care to belittle their efforts. They can play an important part in the post-war world, which we all hope will be much brighter than the pre-war world.

1.24 p.m.

Mr. Graham White: The President of the Board of Trade, in his opening words, described this Bill as a simple and useful Measure. That is a very accurate description of it, and it is on those terms that we accept it. It is, of course, only one element in a much wider campaign and programme which will be necessary if we are to accomplish the most prodigious feat of not only restoring our export trade to its pre-war level, but carrying it forward to a target which seems to be generally agreed, namely, 50 per cent. above the 1938 level. There is no Department of State which has a greater responsibility as we pass from war to peace than the Board of Trade, and, I will add, an equally great opportunity. The volume of our


export trade is approximately one-third of what it was in 1938, which, in itself, was not a particularly good year. The value, even allowing for the increases in price which have taken place, is about half what it was. There has been a most substantial and drastic reduction which shows, incidentally, how we have sacrificed our trade to the purposes of organisation for the war and, also, how very meticulously we have adhered to the arrangements which were come to under the Lend-Lease Agreement. If anybody is in the least bit inclined to doubt our conduct under this Agreement he will find his answer in the figures of our international export trade.
The Minister referred to criticisms which have been made about the actual amount of the Government guarantee under this Bill, and gave certain figures to the House. I think it is probably correct to say that allowing for increased prices the increased limit of guarantee under this Bill would amount approximately to what it was before the war, if we are successful in advancing our export trade to the 50 per cent. increase which was assumed to be the target. But I think the point is of little consequence because, in the past, we have made increases and if the need for them develops we can make them again in the course of an hour or two in the House of Commons. There is, however, one point which I think is worth while commenting, and on which it is interesting to speculate. I should imagine that in the first years of the transition from war to peace the demand for credits in trade may well be less than in subsequent years. We are waiting for a major decision of policy from the Government or the Department as to what trades are to be encouraged to export, whether manufacturers are to be encouraged to export or cater for home trades and needs. It will be a sellers' market during that period after the war, and if manufacturers are allowed to concentrate on the home market there will be little need for credit. I can well foresee that as the immediate demand disappears, and we pass into the future, longer terms of credit will be required. There are many countries which will require longer credit, Russia in particular. In those circumstances, I think it is likely that the Board of Trade or Government may need to modify their

policy, and increase the limit which they are prepared to guarantee.
I think the innovations in the Bill in Clauses 1 and 2 are very useful indeed. To increase entrepot trade may be more important than it seems. It often happens that if you establish a trade connection in one type of goods it attracts other lines of goods, which follow on the same route. The thing is worth while doing for its own sake, but it may have consequences which may be more important than we realise at the present time. That also applies to the proposal to allow the scheme to operate in connection with constructional purposes abroad. A well-established installation abroad, which does its work properly, is a permanent advertisement which we get for nothing, and is a very valuable thing. I think we might very well with advantage to ourselves increase the limit if the demand arises for them without putting any difficulty in the way. My right hon. Friend went on to warn people about deluding themselves by imagining that our international trade can be revived by credits only, pointing out that we are in urgent need of imports. Everyone will be with him on that. If we are to maintain, let alone increase, our standard of life, we must have the necessary food and raw material.
I should like to avail myself of this opportunity to address a warning against people who seem to be bemusing themselves by suggesting that the matter is not really important. I know from past experience that there are very few statements that one can make without meeting contradictions from some quarter or other, but I should have thought the need for the restoration of our export trade, on which we nourish ourselves, on which vast masses of the population are fed, and to give us raw material for our work, was, next to winning the war, the most important of all objects, but there are people who are arguing that, because our imports and exports have been reduced drastically, we have nevertheless maintained full production—greater than we have ever had before—and that we can carry on just the same as in peace with reduced imports.
I suggest that those who are inclined to delude themselves in that way should go over the categories of the things that we import in peace time and strike out


those that we can do without and see what it comes to. I think that is a complete answer to that fallacy. This Bill is just one item, a simple and useful part of a much wider policy and that of a much greater determination for the restoration of our export trade. The Minister of Reconstruction recently appealed to the country to direct their thoughts to the matter and appeal for combined operations. He appealed to private enterprise to take the initiative. If we are to have combined operations, the decks must be cleared for action and the full operations must be defined and those who are to take part in them must be told what their battle stations are to be and what they are expected to do.
It is in that respect that serious criticism can be directed against the Government. There is great uncertainty as to what is expected and what is likely to be able to be done. People are unaware to what countries they are likely to be encouraged to export or which areas of the earth are likely to remain restricted. We do not know what raw materials will be available, or to whom they are to be allocated, and on what basis. We do not know what proportion will be devoted to home and what to foreign trade. All these things want to be cleared up before we can have any combined operations—before we can even begin to think of combined operations. They are all matters of great consequence. What the country wants to be told, shortly and simply, is what can be sold and to whom and by whom it is to be made, and when it is to be made. If we have that general foundation we shall know where we are and what we can send abroad, and make our plans accordingly.
This is, perhaps, not the occasion to ask for a statement, and I do not expect it, but it is an opportunity on which we have to show the Bill in its proper setting as a comparatively small item in what is a much more important matter. It is vital to us that our supplies of food and raw materials should begin to flow into the country as soon as possible and in order to ensure that we must regain and maintain a great volume of export trade—far greater than we have done before. Private enterprise is really helpless to do anything at present. The Government are the only people who can deal with the matter because they are the only people

who have the information on which a programme or policy can be announced. The task that falls on the Board of Trade in this Bill is the sort of programme comparable with our programme of war production. They alone can give the necessary guidance, even if it is only in general outline. Private enterprise must be prepared to set itself to the task of combined operations. I associate myself with the remarks about the necessity for quick decisions. The Minister of Reconstruction said that many of these matters were better dealt with by private enterprise than by officials remote from the scene, who had no personal interest in the matter. In the question of foreign trading that is particularly true, because rapid decision makes all the difference whether a transaction will or will not be arranged. I should like to express my firm belief in the necessity for a plan which will enable the constructive forces of the country to set to work and to know where they are, so that they may act intelligibly and be prepared to answer for the plan of combined operations which the Minister of Reconstruction called for.

1.42 p.m.

Mr. Pritt: I think the House in general accepts the policy of the Bill, but no one imagines that we can build up the whole of our export trade simply by giving credit. That would be turning the story about taking in each other's washing inside out, because there would not be any washing for anyone to take in. I confess that I was a little disturbed at first to see the small figure of £200,000,000, which was mentioned by the President of the Board of Trade, and but a little less disturbed to see the way in which he referred to it. However, this is not a matter which is to be exclusively discussed to-day.
I do not want to talk about policy or the wider question of whether we can keep ourselves alive merely by exporting, or whether we must double our exports and our imports or whatever the argument is, because we should only have hon. Members getting up and saying that we must stick to the letter of the Ottawa decision. What I want to do is to say a word about the position which the U.S.S.R. may take in the matter, and whether, in the operation of the guarantees, they will be able to take advantage of the Measure. I talk very little about the U.S.S.R. in this House, although when


I do get up sometimes hon. Members opposite will immediately begin shouting about it, and I am not at all sure as to the attitude which will be adopted now. One can never be certain with regard to the backwoodsmen opposite as to the relation betwen their physical and their mental age.

Mr. Johnstone: I am sorry, but I did not quite catch what the hon. and learned Gentleman said.

Mr. Pritt: I was merely saying there might be some doubt as to the relationship between the physical and mental age of the backwoodsmen opposite, but I am sure the right hon. Gentleman will not need to dilate upon this in his reply, so he need not worry about it.
I am going to talk about the U.S.S.R. because it is obvious, as has been made plain by the speech of the hon. Member for East Birkenhead (Mr. White) that the Government have to form a policy as to how they will operate these credits and according to the operations what goods will be manufactured, and accordingly to what countries it wishes to export those goods. It is commonly said that this country must export or die. I do not believe that it must export or die, but it is quite plain that we must export a great deal, and that is sufficient for any argument I want to develop. It is equally obvious, I think, that the U.S.S.R., owing to its very difficult economic conditions, must not merely import but must import as largely as possible on credit for some years to come or—not die, of course, but suffer hardship.
As I see the position of that country of immense areas, immense wealth, immense productive capacity and immense working capacity and as I see the colossal destruction that it has suffered in these years of war, then I say that the U.S.S.R. will certainly have to import if it wishes to expand and to enable its immediate population and that of succeeding generations to exist. Whatever credits are given they will have to be very substantial, although I shall not be surprised if some gentlemen will not want them to be given on too long terms. At any rate, the credits will need to cover long periods of years, very much as the local authorities operating in this country have their loans spread over long periods.
It is a great advantage to be able to import on credit and economically it would be of very great advantage to both countries. Politically, I think it would have a very far-reaching advantage if we could have these close and voluminous economic ties and relations. Of course, there are people in this country who do not want it. When I listened to Hitler last night fulminating against the Asiatic Bolshevists, I thought, for a moment, that one or two Members of this House who do not happen to be here but who will forgive me for mentioning them, even if they are not—though if they were not I should still go on mentioning them—had very suddenly learnt German, because Hitler was saying exactly the same thing about the Bolshevists as they had been saying for many years past.
There are people in this country who will want to try and build up an export market to the United States of America in order not to deal with the U.S.S.R. or, which is perhaps more reasonable, in order to be able to say to the U.S.S.R. "We do not have to export to you or die; we are going to export to someone else and, therefore, we want to charge you as much as we possibly can." Of course, the U.S.S.R. also realising the same position could adopt something like the same attitude, and use something like the same words, and say that they could turn to the U.S.A. I do not want to talk to the business men of this country about the necessity for turning to Christian charity, because that would be a waste of words. If I were a business man I expect I would do the same myself. As a matter of fact, what success I have achieved is attributable, in part, to my overcharging of business men for the duty I render to them and I will continue doing so. But, I can ask the Government to take a wider and broader view and to realise that a broad treatment of this question of trade with the U.S.S.R. would make a very great economic step forward in the long run and politically would be enormously useful.
Various Members have referred, quite correctly, to the experience of the export credits to the U.S.S.R. in the past. I think I could sum them up in this way. We did send a very great deal of goods under this system to the U.S.S.R. We thereby kept some of our important branches of industry, including the


machine tools industry, alive after a fashion in the 1930's when the whole of the rest of the world was incapable of buying any machine tools but were only capable of using up and wearing out the machine tools which they then possessed. I believe I am correct in saying that 97 per cent. of the total production of the machine tools of this country went straight to the U.S.S.R. because nobody else wanted them. However, I think we made them pay much too high a price, and we also charged high rates of interest. I am not saying the Government did all this, because under the complicated arrangements between the Government and the business men the Government only really charged the premium, but it is in the Goverment's hands from the first. I thought I would like to say this about the earlier periods of trade with the U.S.S.R., because nobody loved her, except the political Left Wing which, as always, has been proved right. Now, however, the situation is very different. The picture is a very different one. I would not say that the U.S.S.R. is 100 times as strong as she was then, but I would argue that in view of the tremendous increase in her strength it is in the interests of both countries that she should be granted favourable credit terms.
We are, speaking in absolute terms, stronger than we have ever been. A banker could tell you more about this than I can but, under certain standards, we are not so strong in the world as we were before. I hope, therefore, that we shall be reasonable about this policy of trading, and I hope that the Government's policy will be to see that a good deal of these guarantees will go in the advancement of trade with the U.S.S.R. I hope that they will encourage the operations of long credits and that there will be no demand for large payments but that any immediate payment will be very small indeed. I would also like to encourage the policy that the U.S.S.R. is not over-charged.
If the Government act on the lines which I have suggested we shall be building up a good trade with the U.S.S.R. and good political relations. If they do not, then we shall lose a great deal of business. I do not think that it is good for us or for anybody else, that a country with such a record as the

U.S.S.R. has at present should be refused all the help possible in the years after the war, to increase its exports. I think it has always been said in the past that good business is good business for both sides. It is not the case, as so many people have remarked, that one of the partners in a business deal must always suffer. I hope the Government will show an enlightened policy in their attitude to the U.S.S.R. and that they will ignore whatever opposition may be offered to their schemes by men behind the scenes. Of course, it may be said at once that if we are to give long credits on such scales, the £200,000,000 referred to will be utterly inadequate. It is for that reason that I was glad to hear my right hon. Friend's explanation of his approach to the method of operating the guarantees.

1.50 p.m.

Mr. Molson (The High Peak): I think the President of the Board of Trade will have reason to be extremely satisfied with the general tone of this Debate to-day. In all parts of the House there has been a realisation of the great need to expand our export trade after the war. From both sides of the House there has been recognition of the very large liquidation of our overseas assets which, since between 1939 and 1944, have shrunk by £1,000,000,000. It was stated by the President of the Board of Trade, and the statement received support from all parts of the House, that we should need greater exports after the war. To have a thriving industry and a higher standard of living, we should have to be able to export enough to pay for the greater importations of raw materials and food. We are all anxious that the Government should now recognise that we shall be face to face with an economic problem at the end of the war, which, as the hon. Member for Stoke (Mr. Ellis Smith) said, is comparable with the problem of rearmament and the building up of our resources during the war. The hon. Member for Stoke emphasised the need for encouraging inter-Imperial trade and he spoke of the necessity for giving special assistance to our Colonies in exports. I, myself, am in entire agreement, but I should have thought that Clause 2 of the present Bill was devoted to that special purpose. I should like that the Secretary for Overseas Trade when he comes to reply should make it plain whether or not I am right


in thinking that that is the definite step forward which the Bill is making, in using guarantees in this country for the purpose of assisting the export of primary products from other countries, including our own Colonies, to overseas markets.

Mr. Johnstone: If I could put that right now, I would say that would be absolutely true in defining what was intended in the Bill, provided that those products were shipped by United Kingdom merchants.

Mr. Molson: I see—provided they are shipped by United Kingdom merchants. Well, in that case, I would ask the right hon. Gentleman to consider again, before the Committee stage, whether the suggestion of the hon. Member for Stoke might not be adopted and whether we might not extend the scope of that Clause for the purpose of encouraging the export of primary products from our Colonies. I did not quite understand what the hon. Gentleman meant when he referred to the need for mobilising credit. I feel that this is exactly what this Bill is doing. The real problem is the far greater one of obtaining the raw materials and the labour to make the goods that are required and to be able to obtain the markets overseas.

Mr. Evelyn Walkden: With official and efficient people to sell these goods—to see that we have first-class goods to sell, and to see that we have the markets for them—is not that also true?

Mr. Molson: That seems to me to be an entirely unexceptionable statement. Entirely right.

Mr. Walkden: We have said these things for years and years.

Mr. Molson: The hon. Member for Moseley (Sir P. Hannon) referred to the handicap under which our exporters have been labouring as a result of the operations of Lend-Lease, and in all the speeches that have been made it is recognised that this Bill is only a very small Bill dealing with one small part of the export problem. It has been welcomed by both sides of the House, very largely because it is an indication that the Board of Trade and the Department of Overseas Trade are now at last turning their attention to the export problem. The House welcomed the statement that the restrictive conditions of Lend-Lease were going to be

largely removed, as from the beginning of January this year, and I am sure the House will be interested to know from the Secretary of Overseas Trade whether in the case of the iron and steel industry, for example, which was one of those where we ceased to import under Lend-Lease from the United States of America, it has been possible for that industry to begin to expand its exports. I should like to know whether the war industries still require the whole of the output of the iron and steel industry, or whether it is possible now for that industry to begin to look for export markets again. Then I would like to ask him whether it has been possible to provide the shipping space needed for these exports. It is vitally important far us that, as soon as we are free from these restrictions, we should begin to get back into the old markets.

Captain Duncan: Has my hon. Friend taken note of the Adjournment Debate which I initiated last Thursday, when the President of the Board of Trade made a long statement on the relaxation of Lend-Lease controls?

Mr. Molson: I had not seen that, but I will certainly look it up.
With regard to this Bill, the provision of these guarantees has throughout the last 26 years proved useful to all the exporters who have wanted to obtain insurance against the insolvency of their overseas customers. Therefore, it is only natural that there should have been very little in the way of criticism from the House now the Government have introduced a further Bill to increase the maximum amount of guarantees that may be given; but I would like to ask whether it would not be possible for the Department to consider making the guarantees a little more flexible than hey have been in the past. The hon. Member for Pudsey and Otley (Sir G. Gibson) referred to the fact that exporters are required to insure the whole of their trade in all markets with the Department if they wish in order to obtain the guarantees for one particular market. I can fully understand the arguments in favour of that. The underwriter may very well say that it does not suit him for the exporter to go and insure all his bad risks with the Department and refuse to pay premiums on what are the better risks. At the same time, I am sure my right hon. Friend will agree that that has in


fact proved to be a serious limitation upon the usefulness of the service that his Department has provided. In a business with which I was connected before the war, we seriously considered whether we should avail ourselves of this service for certain exports to a new market with which we were not very familiar, but when it became necessary for us at the same time to insure the whole of our export trade to other parts of the world, where we did not feel that it was at all necessary, it ceased to be worth while for us to do so.
I would like to ask my right hon. Friend to tell us a little about the relationship between this Government service and the insurance which is provided by private enterprise. As regards a number of export risks, there are certain organisations in the City connected with the insurance companies, and they are using the machinery of those insurance companies where the same kind of insurance of exports is provided for. I understand that it has not been the practice of the Department to allow any reinsurance with them by the private interests which are engaged in the same field. I would not dogmatise about this, and there may be certain sound reasons why that cannot be done, but I hope that the Government have not any prejudice against co-operating in this field with those insurance companies which are also engaged in insuring exporters against risks. I should have thought that it might have proved greatly to the advantage both of the Department and of the companies concerned if there had been close co-operation between them and if, in cases where the companies desire to do so, they were allowed to reinsure their risks with the Department upon paying a reasonable and proper premium.
Therefore, like all who have spoken before, I welcome this Bill for what it does, and still more for the indication it gives that the Board of Trade and the Department of Overseas Trade are anxious now to do all that they can to encourage exports. Both my right hon. Friends will agree that this is only a very small Measure, and financial facilities for export are reasonably well provided and have been for a good many years past. I hope that before long we shall have further legislation or, at any rate, statements from the Government, indicating

that they are going to tackle the many more difficult problems with which exporters are confronted.

2.7 p.m.

Mr. A. Edwards: Like some other speakers, I feel that the amount involved here is nothing like the amount that is required if it is to do the job. It will only keep up with the increase in costs and will not enable any advance to be made. What I have been concerned about recently is not so much the insurable risks in exports, but the people who want to get some of our goods or some indication when in the future they will be able to accept deliveries and have no trouble about insurance. Even those people cannot get the slightest indication of what the hopes of the future are to be. That is very depressing, and I would not like this very small step which we are taking here to-day to be magnified into a major step in the right direction. As my hon. Friend who opened the Debate on this side said, much more is required, and I would not like this to cover up the defects of neglect in the Department. I was interested in a point which the hon. Member for Pudsey and Otley (Sir G. Gibson) raised. He showed, I think quite rightly, that it would be right in a scheme of this kind to insure a bad risk but not necessarily every good risk. That is the sole purpose of the scheme. It was introduced for the purpose of covering bad risks, but the factor which the hon. Member did not perhaps take into consideration was that here is a case where there is a collective risk of the nation, and the bad ones should stand together with the good. In the case which he quoted, he said he had an opportunity of doing some trade with Rumania, but he could not take it because it would involve him in insurance for the whole of his business, so that it would pay him to let the Rumanian business go by the board.
The Department should cover the bad risks and not insist on covering all the good risks as well. The public can afford to take that risk because it is more a national need than an individual manufacturer's need. There is a fetish in some of the Departments about making profits. Surely the purpose of a policy like this is not to make a profit. The Ministry of Supply provides an illustration of how


this fetish is growing. Valves were imported from America and cost 9d. each, but the Minister of Supply insisted on charging 11s. each. The manufacturer puts them into his sets and sells them back to the Government. The Minister of Supply put that down as profit. Their purpose should be to reduce the costs of production as low as possible in the interests of the radio industry after the war. There is another case in which the Government pay 6¾d. for a certain type of valve for which they receive 35s., and then pride themselves that they are making a profit. That is reducing business to sheer nonsense. The Government should endeavour to spread costs over industry as far as possible, but should not set out to make profits and then boast that they are paying their way and making profits. The £1,500,000 in this Fund should go to reducing the premiums. The nation as a whole will stand any loss that might accrue.
I come to the point which is more vital than any other, that is, the preparations made by the United States as contrasted with the like preparations in this country. They have been talking about it too. You can get American reports in which they tell us without any sense of shame how they are building up their postwar trade. It is part and parcel of their war strategy to build up their post-war trade. American goods are being sent to Italy and distributed by the military authorities. The amount of American goods sent to Italy before the war cannot compare with ours. Now it is more than four to one. In France it is higher, but we cannot get the figures. The Americans talk about cultivating taste for American goods and they speak of the tremendous difficulties they are getting over. They feel that they can afford to give away all these things and treat it as an investment in good will for the post-war years.
We must by this scheme or some other scheme make it clear to America that we cannot afford to go cap in hand to America and beg for some joint policy. What we have to say to America is that we are anxious to have a joint policy but we cannot afford to put all our eggs in one basket. If they have not got a determination to work with us we have an alternative policy. I have looked up some figures, and they show that European countries have paid us more than five

times as much as both America and the U.S.S.R. put together in the pre-war period. There is scope there for developing trade with these two nations. The figures also show that 75 per cent. of our exports went to the European countries and the Empire. Why should we change that unless America is going to give us some good bargain in exchange? On the other side, we find almost the same thing in the sales to us. It happens that the European countries on our doorstep and the Empire give us 75 per cent. of our total trade in exports and imports. What more do we want? The difficulties after the war are not those inherent in the economic situation, but those in the political outlook.
Nobody has a greater regard that I have for America, but with the British Empire and America standing together there is no combination of Powers that can make any trouble for us. Let us realise that. American business men are the most superficial people in the world, and they do not understand hard economic facts. They know a good deal too much about financial facts, a short-term policy which gives them a great advantage, but they do not stop to realise that in 1929, through their short-sightedness, they not only brought themselves down but the whole world crashing with them. We must not be in a position where American mistakes can bring us down with them again in the future. A look at the trade figures before the war shows the possibilities for maintaining them after the war. We are the last people in the world to cry. We have everything in our favour, I believe, if there is a sane policy. One question I would like to ask of the Minister who is now on the Front Bench, and who takes all the responsibility for exports—or we have always looked upon him as such, although he denies his responsibility—

Mr. Johnstone: Can I put this straight? The Department of Overseas Trade has its functions. The hon. Member mentioned the Export Licensing Department. It is a Department of the Board of Trade. As an Under-Secretary of the Board of Trade I take personal responsibility for all that, but it has nothing to do with the Department of Overseas Trade.

Mr. Edwards: I am sure that that is as clear as mud.

Mr. Johnstone: It is justified.

Mr. Edwards: Someone in the Board of Trade will have to deal with this matter. There are at the present time over here, I understand, certain American officials making an economic survey of this country. I should have thought that by this time the Combined Board in Washington had all the economic facts which could possibly be got together about this country and would not need to go to the trouble of sending a Mission here. I would ask the President of the Board of Trade whether this is to be a reciprocal arrangement. Is America going to exchange information with us in return for all the information which she gets so freely from us here? If not, is the Minister going to ask them for it—in fact, insist upon it as a condition of our giving so freely? There should be a free interchange of information.
I would repeat what I said when last we discussed this matter. The President of the United States made a very serious statement in order to encourage returning soldiers. He wants to find jobs for 60,000,000 American people by trebling their exports after the war. They have during the war increased their cash exports into South America, where our trade has gone practically to nil. We must make things clear that if that is to be their policy, there are not to be any reciprocal arrangements and no definite understanding between us. It involves an unemployment problem here and in other countries. If they are to treble their exports after the war we have a perfect right to know how they expect to get paid for them. They have taken a lesson out of our book, of course, as they intend to invest a great deal of money abroad. That is all right if there is to be a permanent policy, but it will be disastrous if it is to be a short-term policy and they stop it suddenly as they did in 1929. I hope that the right hon. Gentleman will make it clear that we are very concerned about their plan to treble their exports after the war, and assure them that there must be a definite understanding between us if there is not to be a very serious breach between us after the war.

2.19 p.m.

Sir George Schuster: One is very much tempted to follow the hon. Gentleman who has just spoken, in discussing the future set-up of world trade, but I am going to try as far as possible to stick to the limited Measure before us.

I want however to start with one general observation arising out of something which the President of the Board of Trade said. He spoke of this country as finding itself in the position after the war of a debtor nation. I put it to my right hon. Friend and to the Government that at some time or other we ought to get from them, because they have command of the resources, a survey of the position and an idea exactly to what extent we shall really be a debtor nation on balance, at the end of the war. We shall owe vast debts; we all know that, but we shall also have large overseas assets still. I wish to see an authoritative statement of what the position is likely to be. I do not ask for a precise statement in this Debate, because I know the difficulties—for example how to value with certainty what our pre-war investments are likely to be worth.
I have referred to this matter for a special reason. I put it to this House as a matter of great importance that, although we shall have to face a heavy load of debts at the end of the war, we ought not to accept the fact, or adopt the mentality which arises from it, that we are going to be permanently a debtor nation. We must guard against a debtor nation mentality. We must tell ourselves that we have got, somehow or other, in the first years after the war to put that situation straight; that we are not going to remain a debtor nation, but rather a powerful agency, as is our true historic role, for world development. As I see it, looking to the distant future, we shall have to look very largely to the export of capital goods, as our main function, and in this way help to build up the prosperity of the world. Let us keep this in mind, however great our immediate post-war difficulties may be. That is a very important point to bear in mind.
That leads me to the observation that in all these discussions of post-war policy it is of immense importance that we should face realistically what are to be our tasks in the first few years after the war. We have to clean up the mess that has been left by the war. That will require a special effort. In those first years we shall have tasks and problems which will need methods and policy quite different from what I hope will be required when we get through the difficulties and float off again on to a high tide of prosperity.
If this Measure is put forward as a subsidiary piece of legislation, well and good; it is harmless—indeed it has great merits. But if we are to be asked to take it as the most substantial bit of evidence that we are to get that the Government are really tackling post-war problems properly, I am afraid I must be rude about it and say that I regard it as a spoonful of soothing syrup or a tit-bit of insignificant importance in relation to what our real problems will be. I make no apology for taking that line, because I feel that the duty rests on all of us to take all opportunities to ask the Government what they are doing to get on with the main tasks that have to be tackled if this country is to make a success of any of its policies after the war.
If one turns to consider the Measure itself, one must ask whether it is well designed to deal with the position which we shall face after the war. I am again speaking of the first few years. We have to realise that this piece of machinery was first created to deal with conditions totally different from those which will exist immediately after the war. It has proved to be a good and sensible piece of machinery which has developed well and is capable of further development; but it was designed to deal with the difficulties which arose in the disturbed conditions after the last war, when it was impossible to feel absolute assurance about the creditability of individual firms or their power to make repayments. The Government stepped in and said that they would back the exporters so as to help them to carry risks which, as an ordinary business transaction could not be undertaken without some form of insurance. Secondly, and this is more important, it was framed at a time when our problem was how to find full employment for our resources, and we were able to produce goods which we were anxious to export.
I suggest that the conditions which will prevail in the first few years after the war will be totally different. The main question will not be: "Is X a good debtor? Can I take a risk in entering into a contract with him?" Those questions will of course arise, but they will be subsidiary. The main questions will be: "On making what goods ought we as a nation to concentrate? To what countries ought we in the national interest to look as our main export markets?" Our total

resources will be limited, and those are the questions which will have to be decided. The existing Advisory Committee will not be able to exercise judgment on those questions. They will be a matter for Government policy to decide. I therefore put it to my right hon. Friend that in the functioning of this machine after the war there will have to be a much closer link up between intelligent Government direction of policy and those whose function it is to advise on the creditability of individual firms.
We have to face this necessity for Government guidance in the first post-war years. I speak as one who believes fundamentally that trade should be as multilateral and as free as possible. But the friends of that principle could do the principle no worse disservice than to ask for its premature application after the war. Our whole trade structure will be dislocated or like a broken limb. It will need splints. We shall have to get it set before we can use it. We shall have to walk before we can run. And we shall have to walk at first on very well prepared paths. Any idea that by creating this kind of machinery we can allow trade to flow freely wherever individual traders please, is completely unrealistic. I most strongly urge the Government to do more to get these ideas across to the country; that we are going to end up the war with these heavy debts and that we must struggle to repay them; that we are going to have to face immense structural changes which can only be met by carefully concerted measures; that in the first five years after the war we shall need as closely regulated a programme for making the best use of our national resources, as any regulations to which we have had to submit in the emergency of war. I wish the Government would make the country face these realities. I am convinced they are realities. Anyhow, taking these things into account I submit that the export credits machinery and experience of the years before the war will require adaptation. In particular the work formerly done by this Advisory Committee cannot alone afford the guidance which will be required in the years after the war.
Another point on which pre-war experience may be no guide is as to the amount which will be required. I was glad to hear what my right hon. Friend said on this matter. He has recognised that the


pace at which credits revolve affects the amount that must be outstanding at any one time. If we have to play a part in rehabilitation of war affected countries—and to retain our most important trade connections this may be necessary—there may be a greater need for supplying capital goods. If this requires two or three years' credits, obviously a higher capital limit may be required than was the case before the war. I take it from what my right hon. Friend said that we can look forward to a considerable amount of elasticity in this matter, and I will not therefore press it further.
I want to call attention to one or two other points. I can be brief because my right hon. Friend has shown his appreciation of the same points. I am very glad that he agrees that we must not rely upon giving easy credit facilities to solve our problems. It will be specially necessary to appreciate that, in the conditions which will prevail after the war, when we shall have no margin of resources of any kind to waste. In those conditions we certainly cannot afford bad debts. We shall need to get full value for every pound's worth of goods we send out of the country. Nor in the conditions after this war shall we be able to afford inefficiency. Therefore we must not encourage the manufacturers of this country to rely on easy credit facilities to enable them to sell goods which are not competitive in price. Demoralising incentives of that kind might be disastrous to that concentration of effort which will be necessary to carry us through our post-war tasks. On these grounds it is dangerous to rely too much on credit machinery.
My last point on the working of this scheme arises from what I have already said. Both here and in most other countries it will, in the conditions after the war, be necessary to regulate our trade in order to prevent the importation of unnecessary goods or the export of goods which will not bring good value in return. One must therefore expect a period when foreign trade will have to be largely governed by concerted measures between Governments. These conditions will affect the whole working of the scheme.
Having made these points as to this particular Measure, I hope my right hon. Friend will not take it amiss if I end by saying this: I am not addressing these

remarks to him personally, because I do not think it is in his power to fulfil what I believe needs to be fulfilled. But I do wish, through him, to address the Government and say that I at any rate, and I think a great many people are in my position, am awaiting the time when we shall get better evidence that the Government are facing realities about our post-war difficulties. I want to repeat a request often made before for more to be done by the Government, which has control of all the resources, in giving guidance to manufacturers and exporters as to what lines they should follow. I have on other occasions compared our lack of guidance with what is being done by Government Departments in the U.S.A. My right hon. Friend, at my request, has placed in the Library one or two reviews issued by the United States Department of Commerce, which show how that country, which stands wholly for individualism and abhors Government interference, has Government Departments which give an infinitely greater measure of assistance to its private traders than we get here from ours, although we are supposed to be looking forward to ambitious forms of State planning. That contrast is remarkable.
I urge that there are a great many shortcomings to be made good, and I will mention three points to illustrate the things that are in my mind. First I hope we can have an end of misleadingly complacent statements. I refer to one, the speech of the Minister of Production in May, 1944, to the effect that although our imports of raw materials had been cut down to 40 per cent. of what they were before the war, our production had gone up by 40 per cent., which has been used as evidence by the hon. Member for Berwick-upon-Tweed (Sir W. Beveridge) in his book on Full Employment, to belittle the importance of imports to this country. Now we know from the White Paper on this country's war effort what that 40 per cent. reduction of raw materials means, and I cannot help feeling that when the Minister of Production sees what interpretations have been put on his words he must regret he has made public statements of so misleading a nature.
Secondly, I would like to call the right hon. Gentleman's attention to a statement that was made in an admirable leading article in last week's "Economist," as to the failure of the Government to give


guidance to a particular industry as to where and in what form they should try to place their surplus capacity available for export. I will not delay the House by reading out the passage, but I would like to put a straight question to the right hon. Gentleman. Is what is said in that passage correct? Finally, I should like to ask a question I have asked before, When are we to get any guidance from the Government as to the way in which we are to achieve the well-known 50 per cent. increase in the volume of our exports after the war? On what lines of goods, or connections with what countries, ought we to concentrate? I want to know, and I am sure that every industry and every manufacturing industry wants to know. Without that guidance we cannot know on what lines we ought to be concentrating our limited resources after the war. It is of vital importance that we should get that information.
These are the big questions. The Bill we are considering is, as I have said, a harmless, indeed a valuable, small Measure. But let my right hon. Friend fully appreciate that those of us who are seriously concerned about the future of this country will not be satisfied with tit-bits of this kind.

2.36 p.m.

Mr. R. C. Morrison: I wish to express my agreement with the statement which has been made that there is a considerable feeling in the country that the Government are not yet getting to close grips with the people who nave to handle this export business, if it is to be obtained. I admit that this is perhaps the most difficult period of time in which to get down to decisions. In the Prime Minister's words, we are in the last lap of the war, but no one knows how long the last lap may last. Meantime, enthusiastic business people who are anxious to get export trade going are straining at the leash, and would like to get started, but are being held back because it seems impossible to get decisions on quite a number of matters. There seems to those of them who have to get in touch with the right hon. Gentleman's Department over these matters to be an interminable delay and a lack of what I said a moment ago, getting to close quarters.
There is a lesson which it seems to me the ordinary people have learnt from the

war, after we have cast aside all the views of the experts about the war. Incidentally, I am reminded that the experts have with one voice told us ordinary simple-tons that when we reached the end of October no great war movement would be possible during the winter months, and that all we could do was to mark time until spring. Now, in the middle of January, and in one of the most intense winters for 50 years, we see most important movements taking place. One lesson we have learned is that what counts is speed. It counts in war and it will count in peace. I am a little alarmed at the number of business people with whom I come into contact, most of them small people, who would like to take part in export trade—and there is no reason why they should not—who, after they have looked at it, seem to come to the conclusion that they are overwhelmed, and that it is something beyond their reach. Before they can receive a definite reply from whatever Government Department is concerned, the prospect of the order which they hoped to get has receded far into the distance. There will come a time soon when it will be possible for the Government Departments concerned to be much more definite than they are now, particularly in regard to the use of labour at present employed on war work, which will be able to concentrate, particularly skilled labour, on goods for export.
There is a growing feeling amongst the business men who talk to me about it that the people who are running things in the Government service are people who have had no experience of running any business themselves, and are therefore very much handicapped in that respect. There is also a feeling, particularly in regard to the smaller firms which may be concerned, and which have not great influence, that their correspondence remains at a lower level in the Department, at a level where the people who handle it always play for safety, and avoid coming to a decision for as long as they possibly can. The result is that these firms are apt to be discouraged. May I read a typical letter I received the other day from a young man who is the managing director of a small firm with £10,000 capital, a firm which is anxious to help, and the way it feels about matters? He did not write to me with any intention that I should raise the matter in Parliament. Indeed, I am presuming on a long personal


friendship with him in mentioning it. I will, if it is desired, hand it to my right hon. Friend. This letter says:
I am awfully shattered about all this blathering about exports.
This is a personal letter to me, and the writer is using stronger language than I usually use in this House.
My own experience is that there is a hell of a lot of talk about getting orders followed by a hell of a lot of red tape about licences. After going through all the formalities there is every chance that the required export licence will be refused. Here is what happened to my own company recently. I went to Dublin and obtained a starting order for—
I will not mention the goods.
Our application for an export licence was refused, and there seems nothing to indicate that an application for a licence would be anything but a waste of time and energy.
We received inquiries from Turkey … to the net value of £1,600-odd, with a promise of a definite order if they obtain the import licence from the B.A.C.C. in Turkey.
On their instructions and also the advice of the Department of Overseas Trade, we sent them pro-forma invoices to enable them to apply for the import licence. In a subsequent talk which I had with the Department of Overseas Trade I learnt that our goods were not included in the schedule, and presumably, therefore, no import licence was required. Probably the order will eventually go to America, as will that from Ireland.
We received an inquiry from India on 20th December, 1943. Nothing further was heard until the 22nd November, 1944, asking whether we could still accept the order—provided the export licence could be obtained—since the order had the backing of the India Office. … The official order was telephoned on 3rd January, 1945 and confirmed in writing the next day with particulars of the export licence. We have made application for a licence for the necessary material for the magnets and this, in turn, will have to be sent to Sheffield. When they will be in a position to supply I don't know, but the shortest delay will be at our end, since we can manufacture the final product in about 3–4 weeks at the outside, providing that we give the order priority. How long do you think this state of affairs will last? Obviously, we must have some sort of lead if we are to consider manufacturing for export again.
No doubt there is a perfectly good, sound answer to that, but there is no reason why the Government should not get to much closer quarters with small enterprising firms like this, and try to explain matters to them and try to help them, instead of delaying their correspondence until the matter has been almost forgotten. If other Government Departments are also involved, time seems

to become of no consequence at all, and the case wanders about until by the time any decision is reached the matter, as I say, has been almost forgotten. The position is not easy at the present time because of the peculiar position in which the war stands.
There is one other point I would mention, and I hope the right hon. Gentleman will take early steps to try and get a decision on it. At the beginning of the war the Government pursued a policy of concentrating industry, and, in many cases, firms who were concentrated and put temporarily out of existence or brought down to a very small basis were firms that were doing a considerable amount of export business. Having reached the last lap, they realised the danger—and I am not advocating it—that there may be some slackening off. I have letters in my pocket from firms who have half a dozen men with from 24 to 43 years' service doing work for export over a range of nine or 10 different countries. These men are now employed in labouring jobs, one making packing cases and another sweeping floors in a factory. One or two others are employed as firemen and are being placed on the list as redundant.
It seems to me that it would be reasonable that the right hon. Gentleman should make an approach to the Minister of Labour on this matter to suggest that, where these men are being declared redundant, as they are in a good many cases, and there is an opportunity for them to get back to the highly skilled work which they were doing for export, they should be given consideration. Up to now, the only decision I have got from another Government Department is that, when any of these people become redundant, they must not go back to their firms but be transferred by the Minister of Labour to work that is regarded as war work. What I am stressing is that the export trade is important. Anyone who has been overseas in the war years knows that there is a tremendous amount of goodwill and good feeling towards this country and its people and a desire to trade with us. If that opportunity is missed, that feeling may die away. I suggest that the right hon Gentleman should try to persuade the other Government Departments concerned to consider these skilled men, now taken away to do war work—if sweeping floors in munition fac-


tories is classified as war work, and, in any case, there will be plenty of people available to do labouring work of that kind—and see if an opportunity cannot be provided for men whose skill has not been needed in the war to get back, when they become redundant, to work for their old firms in the export business.

Mr. Dalton: Before my hon. Friend leaves that point, may I say that I will be very glad to assist him and have this looked into, but he must furnish names. General statements are of no assistance. If he will take the steps to collect the names and send the particulars to me, I will undertake to see that they are carefully considered by the Ministry of Labour, who is responsible for mobilising the man and woman power of the country. I would, however, remind my hon. Friend, because there are limits to what I can undertake to do, and I do not want to be misunderstood, that it has been laid down by the Prime Minister that until the defeat of Germany there can be no substantial release of resources for civilian trade, and everything is subject to that—that we should win the war as soon as we can. So long as that is understood, I will do my best.

Mr. Deputy-Speaker (Mr. Charles Williams): This point has been raised and it is now getting fairly wide. The Minister has given his reply, and I think we should leave it at that, because I think that it is getting beyond the scope of the Bill.

Mr. Morrison: I accept the right hon. Gentleman's invitation. The only other thing I want to do is to inquire whether the Department of Overseas Trade could not give particular consideration to the cases of the smaller firms interested in this matter who desire to get a place in the sun if they can. When these small firms have sent in an application, instead of handling the whole thing by correspondence and getting in a tangle would the right hon. Gentleman consider sending a representative of his Department down to the firm? In half an hour, an intelligent man will be able to sum up the situation far better than by months of correspondence, and be able to see exactly what the position was. I hope the Minister will be able to establish personal contact with these people.

Mr. Johnstone: Yes, Sir. The officers of the Department are always willing at

any time to see exporters and manufacturers who wish to explain their wishes personally. Very often it is the case that officials of different sections of the Department are all needed to talk on the same subject to one man, and it would be very much simpler if he could come to the Department. In innumerable cases, they are invited to do so.

2.52 p.m.

Mr. Petherick: I cordially endorse the plea of my hon. Friend who has just sat down, for the smaller man, but he made a plea in regard to export licences which I think is hardly within the scope of the present Bill. I should like to return to the remarks made by the hon. Member for East Middlesbrough (Mr. A. Edwards), who I do not think is in his seat at the moment, in which he suggested that we should try to arrange a joint policy with America with regard to trade after the war. I am afraid it is going to be very difficult to do that, but, if we could try, it would be a very good thing. I am sure the President of the Board of Trade and the British Government will insist that, if there is to be a joint policy, we shall get a slice off that joint policy.
I will, with regret, throw the first apple of discord into this very harmonious gathering, because I am afraid I cannot agree with my hon. Friends who have spoken that the export credits scheme, in general, has been of particular advantage to this country before the war, and I am rather afraid it may be of less advantage to the country after the war. At the present time, we are, as many hon. Members have pointed out with some misgiving, in a very serious position, and we shall be in a grave position when the war is over. We have had to indulge in an orgy of spending, mostly necessary, but we have built up a gigantic foreign debt, about which, presumably, some action will have to be taken after the war. We have crushing taxation and a nightmare of unknown further commitments which we shall have to undertake before all this is settled. The President of the Board of Trade, in his opening remarks, was, if I may say so, very wise in not going too deeply into the Bill and in suggesting that the whole difficulty in which our foreign trade will be after the war will certainly not be cured by anything of this nature. The right hon. Gentleman never suggested


that, by these export credit schemes, the whole position could be cured. He made only very modest statements, and I think he was right. I hope the Secretary for Overseas Trade, whom we are all so very glad to see here to-day, when he replies, will give the answers to some of the more detailed points that have been mentioned.
In the Explanatory Memorandum to the Bill there is what is, to my mind, a disingenuous paragraph—the last—which reads:
The guarantees given under the Export Guarantees Act, 1939, and earlier enactments, have imposed no charge on the Exchequer …
If all the schemes are lumped together that may possibly be correct, but, taking the schemes individually, I regret to say that that is not the case. The first scheme after the war ended up with a very heavy loss to the Exchequer. The next scheme ended with a loss of some £91,000. It is only the later schemes in the last years which have been self-supporting. The present scheme has, I understand, resulted in a profit of £1,000,000. I think one of my hon. Friends opposite who objected to a profit of this nature being made was very wrong in considering it as profit at all. It seems to me that it is merely £1,000,000 surplus—and I am very glad to know that there is one—which should be treated as a reserve against bad debts. The last scheme immediately before the war, which was operating for some years up to 1939, made a profit, to my mind, out of one country alone, and that country was Russia. The maximum of credits allowed under that scheme in those days was £50,000,000, of which £20,000,000 represented credits to Russia. The reason was because a very large premium was charged.
I do not think that is the right way to look at it. We should not put so many eggs—two-fifths in that case—into one basket. We should look at the matter from a businesslike point of view, as the ordinary credit insurance company does, and endeavour to spread the risk. I do not think it will be suggested that, because I object to two-fifths of the export credits being in respect of goods for Russia, I do so on political grounds, because I always believed and declared in this House between the wars that we should have traded with Russia on fair and equal terms to both sides. That is quite a different thing. If the risk is

good, it ought not to be necessary to charge 10 per cent. We ought to take a mixed bag of foreign countries overseas and spread the risk, which is, after all, only a risk to the whole country. What is this export credit scheme in essence? To put it perfectly crudely, it is the taxpayer assuming risks greater and/or worse than the ordinary exporter will assume. That is all there is in it. Therefore, it seems to me that it is little advantage to the taxpayer if the country takes a bad risk and saves the individual trader, because the country will, in fact, lose.
I think it is necessary to relate, for post-war purposes, the credit scheme, and short-term credits in general, to long-term credits, because when, for a period of time, short-term credits are given in large sums to foreign countries, the tendency is generally, after a period of time, to convert a great many of the short-term credits into long-term loans, and I do not think we can really consider one without the other. The President of the Board of Trade, in an earlier Debate either at the end of last year or the beginning of this, made a very wise remark, and it is a truism, when he said that "we do not need exports for their own sake." That is, of course, obviously true. The only reason for trade in the interior of a country is to enable men to live; foreign trade is to enable men to live better.
Therefore, I think we can claim that exports are only for four reasons. The first of these is, to pay for imports of goods, and, obviously, is the most important; the second is, for imports of gold, at any rate while gold still retains its pre-war, old-time respect; the third is, in order to invest abroad; and the fourth is, to provide for the expenditure of British nationals abroad. Exports in order to pay for imports is obviously the most important of the four reasons, but in present times and to some extent in the future, numbers two and three, of gold and the making of investments, are only valuable as a form of insurance against a rainy day and should not be overdone. It has not really benefited this country to build up a vast structure of foreign I.O.U.s.
After the war the strongest card we shall have to play is not export credits and loans, because we shall owe so much ourselves that it will be difficult to pledge


our credit much further. The strongest card—though it will entail a considerable measure of control—is to say to any foreign country, "If you wish to sell to us, you will have to buy from us." That is the trump card which we can always play, if all else fails at the end, if we do not play it earlier. I should very much regret and should be deeply alarmed if we, after the war, engaged in a wild rush to sell to any country that would buy our goods. I may be wrong, but I can see that for two or three years after the war there will be no difficulty in selling our goods abroad. A number of foreign countries—the devastated countries of Europe—will be anxious to buy goods for the requirements of their industries, machinery and so on, and also consumer goods, because they cannot get their industries going to make consumer goods themselves. There is little we need from Europe that we cannot make ourselves. My fear is that we shall build up this gigantic loan system to Europe which will never be paid off and cannot be paid off in the form of goods.
Let us have a look at what has happened in relation to foreign loans. It is very difficult to get the figures exactly right, but in about 60 years up to the outbreak of war we lent £4,000,000,000 abroad, of which £2,000,000,000 was the market value at the end of 1938. We might as well have made all the locomotives, shirts and whiskey represented by that £2,000,000,000 and thrown the whole lot into the Atlantic for all the good it did to this country. We have to look at exports in terms of material and man-power. What we have to aim at—not immediately, because we have to export a lot to try and get back some of our foreign trade—ultimately is not to have a huge foreign trade balance in our favour even if we could do it. We require to export enough to pay for the imports we need, with a modest margin to enable us to build up a reserve against a rainy day and for strategical and long-term reasons.
In coming back to the short-term issue of credits it is proposed to provide under this Bill, I would ask the right hon. Gentleman the Secretary to the Department of Overseas Trade what he is going to do with these export credits. Where are they going? Are they going to Europe, to the Empire, to South America? Can he give some idea of how they are to be

used? It is of immense importance to this country to know where they are going. With regard to Russia—and I now see the hon. Member for West Fife (Mr. Gallacher) in his place: I do not think that if he had been here earlier he would have reproved me for what I said—I think it was wrong before the war to give export credits to Russia for this reason. It was not because I dislike Russians or dislike their policy, as I have explained already, but Russia had a very considerable favourable trade balance. She sold a great deal more to us than she bought from us. She had plenty of sterling at her disposal, and taking Russia as an example, it is a waste of export credits to give them to countries which already have favourable balances of trade with us. If we are satisfied we are on friendly terms with Russia—and I hope that we shall remain so—it should be done in the form of long-term loans, if we are financially able to do it, and not in the form of export guarantees.
I would ask my right hon. Friend if he would agree that there are really five questions to be satisfactorily answered as to whether we should give those credits or not to any given country. The first is whether the country in question has a good or a bad record and the second, whether it is a good political and economic risk. It is no good throwing money in the form of credits down the drain. The third is whether the country in question has or has not a favourable balance of trade with the United Kingdom. If it has, I see no reason whatever for giving any short-term credit at all. We should say to a country, "If you are going to sell to us, then you must buy from us up to the amount you sell to us." The fourth question is whether the money in relation to the export trade guarantee will, in fact, be spent in this country. In every case, as far as short-term credits are concerned, except in the instance of the Empire, goods must be bought here. But as far as long-term credits are concerned, it is important, if we are to make a loan to any country in future, that we should make it one of the conditions that the goods in respect of which the loan is granted must be bought here and nowhere else.
I would like to say how much I agree with the hon. Member who represents Middlesbrough, East, who put in a strong plea that as much as possible of these


export credits should be granted in respect of exports to the Empire. Quite apart from sentimental, strategic and imperial feelings, which should appeal to us very strongly, the fact is that they are a very good risk. In the years from 1918 to 1938 about £400,000,000 of overseas loans were made to foreign countries and much of that lost. At the end of that period, of that £400,000,000 there was only £274,000,000 worth still in existence. The drop in value had been 30 per cent. In the same time, after 20 years, the drop in the loans made in the Empire was only 3 per cent., in spite of a very heavy drop in the general value of trade. From every point of view these export credits should, as far as possible, be a definite part of Government policy in giving these guarantees in respect of our exports to the Empire for the reasons stated. I hope that the right hon. Gentleman, in replying, will give full consideration to that point because I believe it to be one of the most important in the course of this Debate.

3.11 p.m.

Mr. Benson: I trust that the President of the Board of Trade has noted that practically every hon. Member who has addressed the House has started off by emphasising that this is a very tiny Bill. Had the House not been extremely worried about the whole problem of our post-war export trade, this Bill would have gone through, in all probability, wthout any discussion at all. There is nothing new in it. It is merely a writing-up of the figures of the 1939 Act. The mere fact that the Debate is likely to run for the whole of the day, is an indication that the House is very perturbed indeed, not merely about the problem which will arise after the war but also about the question of whether the Board of Trade is, at present, planning on broad and active lines to help industry to meet the extremely grave situation with which it will be faced. That clearly is what the Board of Trade ought to be doing, and I cannot believe that the President is not treating the matter seriously. I am not particularly interested in criticisms that this little firm or that little firm has not got a raw material for prototype. During war-time the difficulties of the Board of Trade to facilitate exports are overwhelming but the real problem is, what is the Board of Trade doing now to plan to meet

the difficulties that industry will have to meet after the war?
A number of hon. Members have referred to the export of capital goods from this country after the war. I was very glad that the President of the Board of Trade emphasised that we have not any great margin for the export of goods on long-term credit. We have to meet in pre-war figures the additional export of £200,000,000. Any exports on long-term credit can only come out of our savings, and our maximum amount of international saving as represented by a favourable balance was never more than £150,000,000 even in our best years.

Mr. Stokes: Will my hon. Friend make it clear in which terms he is talking, whether in pre-war or post-war? The President of the Board of Trade says they are double now.

Mr. Benson: I said that in pre-war figures we should have to increase exports by £200,000,000. What the actual figures will be I do not know. I suggest that in present circumstances capital equipment, like charity, ought to begin at home. It was very unfortunate that during the 1930's British industrialists allowed our industries to run behind and we shall have to bring industry up to its proper standard both to secure an increase of national income and an increase in the efficiency which would enable us to export the necessary quantities. Let us recognise that vast sums will have to be sunk in British industry and they also will have to come out of savings. Let us not forget that.
I hope the House will not consider me frivolous if I stick to the Bill. I should have loved to deal with the extraordinary terror of American exports displayed in our Debates but which I think is entirely unjustified. I am therefore pleased to see that the President of the Board of Trade has increased the guarantee limit because I assume that it means there is to be a great deal more use made of it after the war than before. I think that in a scheme of this kind, we must necessarily work on the assumption that it is going to pay its way. If it does not, it will be a concealed subsidy, and I do not like that. But I was a little astonished when my right hon. Friend gave his figures because it meant that the premiums had carried two heavy blows, first the very early blow


of the collapse of Rumania in which the scheme lost some millions of pounds and, second, the sudden burden thrown upon its resources by the outbreak of war.
Therefore I throw out the suggestion to the President of the Board of Trade that although the export guarantees scheme must be worked on a paying basis it should be aimed primarily at insuring the English exporter against the ordinary commercial risks of trade, and that the premium should not be so high as to enable the Government, without loss, to carry war risks or the risk of a collapse like that which took place in Rumania. The Rumanian collapse and the war risk were risks that should normally be carried by the commercial trader and no premium should take account of such possibilities.

Mr. Stokes: Does the right hon. Gentleman mean that insurances should not cover ordinary commercial risks, or should not cover both political and war risks?

Mr. Benson: I thought I had made the position quite clear, that an individual trader should not be asked to pay a premium which covers war risks and what I can only term as "cosmic" risks. What I want is not a limitation of the Government guarantee, but a limitation of the amount of the premium.
Before the war the export guarantee facilities and the many other facilities of the Department of Overseas Trade were greatly neglected by our commercial people. What happened in the period between the two wars? We started this insurance scheme in 1919. There were nine different Acts between 1919 and 1939. When, at the end of 1939, we increased the limit to £75,000,000, the amount of risk that was outstanding was £44,000,000, of which £14,000,000 was Turkish—and that was not normal commercial trading but was something which the Government was urging and pushing. In other words, after 20 years of export insurance, the outstanding commercial risk was only £30,000,000 on an export of something in the neighbourhood of £550,000,000.
It is obvious that our traders did not take advantage of this scheme. Maybe the premiums were rather high, but that could not be the only excuse, and it was not the only thing that was neglected by the traders. The Department of Overseas

Trade offered, not at a premium but free, very considerable facilities for exports which were not taken advantage of. They had a wonderful system which covered practically the whole of the world, of information with regard to the type of imports that were demanded by the various countries, and they had samples here of the stuff required. They had details of importing agents all over the world and the type of material they could handle. They had a wonderful directory of credit-worthiness, of merchants all over the world, yet the Department was continually complaining within their own four walls, that this directory was not used by the traders to anything like the extent to which it should have been used. All I can say is that the publicity of the Board of Trade and the Department of Overseas Trade was extremely weak, for the vast majority of exporters did not know anything about these facilities, and the sooner the Department advertise what they have got to offer the better it will be for everyone.
I would like to revert to the question of premiums. I do not know in what condition the directory of credit-worthiness will be in after the war but it will probably require rebuilding. I suggest it is essential to re-establish it, and to extend and develop it so that this information will again be at the disposal of the British exporter. It would also be extremely useful in connection with the assessment of risks that exporters might be likely to take in the future. If the Department of Overseas Trade would act as a kind of world financial advisory agent to exporters, it could use its information regarding this credit-worthiness not only to make it available to the public generally, but also as a basis for its own premiums, so that a minimum rate is charged. I want to repeat that I feel I am expressing the feelings of the House in saying that this Bill is nothing more than a lubricant, and that what we want to see is more driving force, something more constructive and more co-ordinated which can come from one source and from one source only—that is the Board of Trade.

3.27 p.m.

Mr. Higgs: I have been interested in the excellent speech of the hon. Member for Penryn and Fal-


mouth (Mr Petherick) and particularly in his remarks with regard to Russia. He asked why extend export credit to Russia when we were not particularly in need of them for monetary purposes. The natural position is—although naturally it is not the present state of affairs—that the supply of commodities exceeds the demand. If we were to lose the Russian trade it does not say that we are necessarily going to get trade in other directions to take its place, and therefore it is absolutely necessary to encourage trade with all countries all over the world at all times.

Mr. Petherick: My hon. Friend has not quite understood my point, which was that as Russia had a very favourable trade balance, there was no reason at all why she should not come to us and say that she was willing to pay for another £30,000,000 of trade in order to level it up.

Mr. Higgs: My answer to that is that there is no indication as to how this country is going to get payment for its goods. I in common with other Members am very pleased that this Bill should be brought forward. I do not think we connect agriculture with export sufficiently because for agriculture we have our raw materials and it is even said that after this war the demand for goods will exceed the supply. That is quite right, but people seem to forget that in order to export we must first import the necessary raw materials, which have to be paid for. Many who have spoken to-day have said what we must export after the war, but the commodities we export are primarily constructed from imported raw materials. We have to pay for those materials and therein lies the difficulty of getting our machinery in motion after the war. We cannot export a motor-car, without importing rubber, leather, non-ferrous metals and so forth, and we have to pay for those imports, before we can get the machine going. That is the reason why this Bill, and the increase in credits, is desirable. If we are to increase exports by 50 per cent., does the House realise that that necessitates practically all manufacturers exporting 20 per cent. of their products? It is a big percentage. Few firms did that before the war, and it will be a great strain, even if we can get the machinery in motion, to get so large a percentage.
The percentage of exports made under export credit guarantees during the war has been relatively small. The portion that has not been done was the safe portion. It has been said on many occasions during the Debate that we were increasing the credit value from £75,000,000 to £200,000,000. The President of the Board of Trade remarked on the increase in value of the commodities which we were exporting to be in the order of 100 per cent., and said that the £75,000,000 now becomes £150,000,000. But there is another factor. We are asked to increase our exports another 50 per cent., which will necessitate an export value of £225,000,000. It does not imply that we shall be out of pocket on that at any one time, but the figure is larger than that expressed by the Minister. I do not think that this £200,000,000 is a generous gesture in any way, considering that previous Acts have not involved any public loss. If this amount is not sufficient we have to go through the same procedure again, and I think it is far better to increase the figure now than wait until a later date. Whatever is done by increasing and encouraging export credits they are no substitute for the initiative, energy and skill that must be put into the development of our export trade by industrialists. We must become overseas-minded, and remember that export trade cannot be developed from Whitehall.
There is not much in this Bill; much is omitted. It has been a principle of the Department in the past to persuade exporters to insure their entire export trade. I hope that will be dropped in the future, because it is playing for safety. If the exporter is compelled to insure the whole of his trade he is most likely not to take advantage of export credits. He would rather carry the risk himself, or probably not embark upon the trade in various countries that are risky. It may be reasonable to insure the total business in one particular market, but I do not think that the Department should ask for anything more than that. The Minister is well aware that trusted customers constitute the large majority of people with whom exporters do business. Comprehensive cover absolutely kills the scheme. It is right that a firm must be reasonable with regard to discretion as to whom they will sell goods. Originally, 75 per cent. of the risk was covered by the Overseas


Trade Department, which, on occasions, was increased to 90 per cent. of the risk.
I do not know that I am altogether in favour of that large increase. I think a trader should carry some risk, otherwise he is apt to embark on trade of an undesirable character, which is of no benefit to himself or to the nation. I must also remind the Minister that the status information about overseas buyers is very slow in coming through. I know it is difficult to ask for status information from a firm in any part of the world and expect to get it by return post, but information that takes a month, six weeks or two months—it is too long. The information should come through fairly quickly if there is to be proper representation overseas.
There is another point, namely, the delay in issuing permits for export. Surely the Department of Overseas Trade knows when an application is made for a permit whether it will be granted or not. It is not necessary to refer to records or to a country overseas to get that information, and I think it is reasonable to suggest that traders should get the information within a week of making their application, instead of waiting four to six weeks, which is an altogether unreasonable time. A Bill of this description is more likely to he used by firms new to overseas markets than those with overseas trading experience, and if the Department takes a long while to furnish the information it is quite possible that the trader will change his mind. We have to use every means in our power in the immediate future in order to expand our exports. I say: Give the trade some encouragement and assistance. Further. I should like to know whether the insurance policy will cover the refusal by unscrupulous customers to take goods on arrival. In the past the policy has not covered that risk. The position is this: An exporter will send a consignment of goods to a foreign port, and a trader overseas will refuse to take them. There are two alternatives—one to have the goods shipped back to this country, and the other to sell them at the foreign port for what can be obtained for them. The policy does not cover any loss in that direction, and it is one of the great difficulties with which a trader has to contend, particularly in new markets. I hope the Minister, when he replies to the Debate, will give the House some information on that point.
As regards the policy itself, I consider it is altogether too complicated. I would like to know how the policy was drawn up. Was it on hypothetical considerations, or from practical experience? How many of the clauses have ever been used? Documents of this description, to a person who has not previously embarked on overseas trade, are apt to put him off. Overseas trade is a complicated matter, and, to a newcomer, the procedure to be gone through is apt to discourage him. I would like to know why brokerage is paid on insurance for export credit. I believe the Government pay it, and I see no reason why they should. I agree that the premiums charged have, on the aggregate, been low—something in the order of three-quarters of 1 per cent. to 1 per cent., but it is not uncommon for firms which have done considerable export trade during the last quarter of a century to have made no bad debts at all. It proves that the risk is not great. Are we taking sufficient risks? A firm can make no bad debts by doing no business but when their bad debts increase a bit they know that they are taking a reasonable amount of risk, and I do not think there is anything to be proud of in the fact that our percentage is low. The Russian insurance problem has been referred to, and the Department, I believe, in the first place, charged 7 per cent. on its original exports to Russia. What has been the experience? There have been no bad debts whatever. I really do not think that that is insurance in any sense.
If facilities are not given for increasing our overseas trade, manufacturers will, as soon as the war ends, undoubtedly take the line of least resistance, which will be to supply the home markets. To do overseas trade you have to know languages and shipping problems, the turnover is slower, innumerable forms have to be filled up and it is the Government's duty to do a little more than they are to encourage those who are prepared to embark upon this somewhat risky and difficult method of disposing of their goods. As to the future of our trade in general, I am not such a pessimist as some of my friends. We refer to the competition we have to face from America. I agree, but do we realise that Germany, France, Japan and Italy are likely to be out of it after the war, and that world trade will more or less resolve itself into competition between this country and the


United States? We have done our quota towards winning the war, and I feel convinced that we can maintain our overseas trade to the credit of this country if the Government will co-operate with traders and traders will co-operate with the Government.

3.45 p.m.

Mr. Sloan: I hope the Government will not have any difficulty in getting their Bill. I was particularly pleased with the remarks of the President of the Board of Trade, who recognises that the purpose of exports is not merely to send goods out of the country but to secure raw materials in return, and goods which we could not without considerable difficulty produce for ourselves. I think that is a very reasonable attitude to adopt. On that basis, I think we can be secure. He indicated that the purpose of the Bill is that our export trade should not be handicapped, and again we are all agreed on that. As long as that is understood, there is not a great deal in the Bill. It is merely a policy of regulation. But I am afraid my right hon. Friend has not the whole House behind him in his outlook in regard to exports. As a matter of fact we are in a position of armed neutrality, the position that we occupied during the armaments race in the 1930's, when each country was manoeuvring for position and preparing for the flare up that was to come later. We are being told that the U.S.A. and the U.S.S.R. are preparing for an attack upon markets, while we are lagging behind in the race and that we shall have to get a considerable move on. We are told, not from one side of the House only, that we have to expand or die. It is like Hitler's Lebensraum—it is a parallel which can quite easily be drawn—and my hon. Friend the Member for Stoke (Mr. Smith) has given us a mystical figure that he had in his mind of a 50 per cent. increase over, 1938.

Mr. Ellis Smith: I said, "if we increased exports by 50 per cent."

Mr. Sloan: If they are to be increased by 50 per cent. it will take more than the credit scheme of this Bill to do it. But I think the psychology is all wrong. If the Bill is meant to foster such an increase as 50 per cent., we should know what it means. It means that the people who produce the goods will have to work 50

per cent. harder than they did. If I want 50 per cent. more coal from the mines in Ayrshire, I only know of one way in which it can be done, and that is by the miners working 50 per cent. harder. There is no other way under the sun. What is this mystical figure of 50 per cent.? Are we fighting the war for export markets? The Prime Minister has said that we seek no territorial advantage in the war. Can we lay our hands on our hearts and say that we seek no economic advantage out of this? Something has been said about the loss of our South American trade. We deplore the fact that we have £1,000,000,000 invested, some £300,000,000 of which gives no return. We have invested money all over the world and formed credits here and there. We say "we," but I never had a single copper of foreign credit anywhere. The loss of the South American trade means nothing whatever to the great mass of the working classes.

Dr. Russell Thomas: Does it not mean that they have had very cheap food?

Mr. Sloan: In the 20 years between the two wars, according to the highest authority in the land, 50 per cent. of our people were under nourished. That is what cheap food did for them. The more we have exported the poorer we have become, and the workers engaged in the exporting industries were always the poorest fed. I hope we shall never be required to provide credit for export coal. I hope there will never be another ton of coal exported, because all that the export of coal has brought to the miners is poverty and misery. When we want an increase in wages we are told we cannot have it because we cannot beat the Poles. The wages of the Polish miners are 4s. a day. How by increasing exports by 50 per cent. you are going to increase the standard of life of the people I am quite unable to understand. I agree with the President of the Board of Trade that we must export to live, but not export to capture someone else's markets. If this volume of export takes place what is to happen to all the effort, all the expenditure, all the brains of the country that have been put into agriculture in the last five years? If we export we must get something in return.

Mr. Stokes: Why must we get something in return?

Mr. Sloan: I thought the hon. Member was a financier and an economist. We must give something in return, or build up these foreign credits, those invisible exports and imports which maintain this country at the top of the tree, with a standard of life far surpassing any other nation in the world. It requires some careful examination. How do you raise the standard of life by sending goods out of the country? It would be a great advantage to us if we developed our home industry rather than continued to look for markets abroad. If we have a factory erected for manufacturing aluminium pans and export them, shall we get aluminium pans in return, that is, by the balance of trade you bring something in because you have sent something out. We have had a famine of toys in this country during the Christmas period, and it was shameful to see the exploitation taking place in regard to the supply of toys to children. Are they very difficult to manufacture? Is it impossible that some of the machinery which will be used for the purpose of our export trade could be diverted to the manufacture of toys? If we can manufacture at home, the things we require, we do not need to export at all, and I am suggesting that it is possible.
There are fields of enterprise we should develop and there should be no difficulty, unless the statement made somewhere is true that the bankers largely dominate this Advisory Committee—

Mr. Dalton: Nobody has said that.

Mr. Sloan: I am not suggesting that the President of the Board of Trade said it, and I am prepared to accept his word, but there is certainly more than a suspicion that the banks largely dominate this Advisory Committee, and that they select to a large extent how the credits are to be administered.
We ought to be very careful that political likes and dislikes do not play a very important part in the administration of this Fund. I am quite sure that after the war we shall have our political likes and dislikes, just as we had in the 1920's. The people we liked then may not be the people we like now, and the people we hated then may not be exactly those we shall hate so particularly now, but they will be there. One has only to think back to the 1920's, to the disruption of trade with the U.S.S.R., to the Arcos raids, and

to the diabolical lies that were told from that Front Bench—different personnel of course. [An HON. MEMBER: "Not altogether.] I was thinking in terms of the President of the Board of Trade—when we were told that we could not do trade with Russia because we would not get paid, that we could not send any amount of goods to Russia because we could not get any payment in return. As a matter of fact, the Scottish Co-operative Wholesale Society proved that that was unfounded, because they never had a better customer in their existence than the U.S.S.R. The same thing may take place again, and there is still room for trade with that country. They can supply us with many commodities which we cannot produce ourselves, and it would be a pity if, in any way at all, this Advisory Committee were to discourage trade with the U.S.S.R.
How will these credit facilities be used for establishing trade with India, which is a great potential market for British goods? Here is a country with a very low standard of life. If the people of India could spend £1 more a head they would create a market of £400,000,000. I should like to know what is to be done in an attempt to create trade with India.
I quite agree that the Bill, as far as it goes, is good enough, but I should like, at the same time, to know that our export trade will be carried on on a fair and equitable basis; that we shall not again enter into the era of a scramble for world markets, a scramble that can only ultimately lead to difficulties again between the nations. I hope that there will be some sort of international agreement whereby the trade of the world will be conducted harmoniously in the interests of the people of all countries of the world.

4.7 p.m.

Mr. Boothby: With some parts of the speech of the hon. Member for South Ayrshire (Mr. Sloan) I find myself in a measure of agreement, particularly that part which related to the story of the coal trade in the past. I well remember the 1920's, as I daresay the President of the Board of Trade remembers them, the ruthless, desperate fight for export markets in Europe conducted by the coal industry in this country. It brought nothing but ruin to the coal industry, to the coalowners, and to the miners. It resulted, as a matter of


fact, in every ton of coal cut in Europe being sold under the cost of production for a period of years; and that brought nothing but suffering and misery to the miners not only in this country but in every other country. Similarly, there was something in what he said about our policy during the same period towards Russia. We lent a very large amount of money to Germany in the 1920's, and the Germans used that money as the basis of credit to finance the capital reconstruction of Soviet Russia. In the event, the Russians repaid the Germans in gold and in full; while the Germans "bilked" us, which was not very funny, and showed, perhaps, that our financial policy had not been very wisely directed. Incidentally, we were suffering from acute unemployment at the time, and the Germans undertook the reconstruction in Russia which we might otherwise have done.
This Bill, inevitably, has raised large general issues of trade policy, in which, as hon. Member after hon. Member has pointed out, we are all very interested. I think it is rather important to try to get into some kind of perspective the general position of this country with regard to post-war export trade. So many statements are being bandied about now in the Press, in speeches all over the place on this subject, some of them wise, some of them very foolish. One hears it said, for example, that after this war we shall be very poor, and also that we shall be very rich. Both statements are true. We shall be heavily in debt. We shall owe about £4,000,000,000 to countries, mercifully within the sterling area. We are under no obligation to discharge our debts in terms of gold; in fact, we must pay them in terms of goods. We shall not be in a position to invest heavily abroad.
Here again there has been some confusion, I think, in this Debate between investment and the credits we are discussing under this Bill. The right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot) once pointed out that it is important to distinguish between trade, which is the exchange of goods; between lending, which involves return; and development or investment, which, he said, in the long run, means giving the stuff away. I think there is some mental confusion between these different things, and

it has been apparent throughout all this Debate. We are now discussing revolving credits, which are really lending, because we expect return on these credits, and return in kind. Investment for development is quite another thing. We shall not be in a position after this war to invest our money all over the world as we did before. Does this matter? I do not think that it does. The 1920's were an absolute field-day for foreign investment, on a bigger scale than had ever taken place in the history of the world, and they culminated in the worst economic collapse ever experienced by Western civilisation.
At the same time we must bear in mind that we shall be richer in terms of real wealth. Our land will be much better cultivated, our capital equipment will be far more extensive than it was in 1939, and our workers will be more highly skilled. My right hon. Friend the President of the Board of Trade referred on two occasions in the course of his speech to the necessity for an "export drive" after this war. I must confess that I do not like the phrase "export drive." It is too reminiscent of some of our friends in the United States at the present time; and when they talk about an export drive we take great umbrage. Indeed, some of us, as an hon. Member has pointed out, become very nearly panic-stricken at the idea of this great American export drive. Therefore I would say, with due respect, to my right hon. Friend, that I think he would be well advised to stop talking about an "export drive." It is not a very good-sounding phrase.
What about the balance of payments? What is the real truth about our foreign trade position? I want to give a few figures to the House, if I may. They are only approximate, round figures; and, for the benefit of my hon. Friend the Member for Ipswich (Mr. Stokes), I say right away that they are in terms of pre-war, not post-war, values. I shall keep to pre-war values all through this speech; and I shall not do sums, because I think they would not be accurate. But I do not think the proportions are wrong. Put the net annual revenue of our imports before 1939 at £800,000,000; food £400,000,000; raw materials £240,000,000; manufactured goods £80,000,000. Subtract the value of raw materials used for re-export, and the total value of our retained imports


amounted to about £700,000,000. I am giving these figures simply as an example. How did we pay for them? We exported £300,000,000 worth of goods a year. Our invisible exports amounted to £350,000,000, of which no less than £200,000,000 was in the form of income received from foreign investments. The unfavourable balance which was left, which amounted to approximately £50,000,000, we met by realising our foreign assets, of which at that time we had plenty, and of which now we have very much less.
What is to be our position after this war is over? The first thing to say is that we do not know, and at the present moment we cannot possibly tell. We do not know the extent of our loss of foreign investments. Nobody can tell us that. Nobody can give even an approximate estimate at the present time of our foreign assets. We do not know to what extent our shipping and financial services will be required after this war by countries overseas. It really is hopeless to try to make an accurate estimate of our position. With regard to the balance of payments, all we know for certain is that we shall have to export enough to obtain sufficient raw materials to enable our productive machinery to function smoothly, and at a high level of activity. Therefore, I cannot help agreeing with the hon. Member for South Ayrshire, and with other hon. Members, that to talk at this moment about the vital necessity for an increase of 50 per cent. of exports, as, compared with pre-war, is wild talk. I want to ask my right hon. Friend when he comes to reply on what data is this estimate of a 50 per cent. increase based. I do not think he has the data. I do net think anybody on earth has the data. They do not in fact exist.
There is another point. This problem is not merely one of exports, it is also a problem of production. Let us look at it for a moment from that angle. We can increase our food production in this country by £200,000,000 a year. That we know, because we have done it since the war broke out. Here, all that is required is a change of emphasis in favour of meat, milk, poultry and vegetables, as against wheat and sugar. We can provide all the feeding stuffs and all the fish that we require. So what do our import requirements of food boil down to? Wheat,

sugar, cocoa, coffee, tea; and, in limited quantities, frozen beef and mutton, bacon, cheese and butter, citrus fruits, bananas. It is not without significance that every one of these can be obtained from within the British Empire, and certainly within the sterling area. The same thing applies to most of the basic raw materials other than food. It applies to copper, lead, zinc, cotton, wool, oil and rubber, all of which can be produced either within the British Empire or within the sterling area.
On the industrial side, we can certainly increase our output of finished manufactured goods, which were previously imported, by £40,000,000 a year; and of semi-manufactured goods by another £40,000,000. In addition, there is the whole range of synthetic products awaiting development; particularly products from coal, such as tar and synthetic rubber, all of which can be used to increase production in this country.
Let us now try to balance the probable import requirements of this country after the war, against the export potential. We can cut food imports by £200,000,000. We can cut imports of manufactured and semi-manufactured goods by nearly £100,000,000, if we must. If we increase our imports of raw materials other than food by £50,000,000, this gives a total figure of retained imparts after the war of approximately £470,000,000. If we cut our invisible exports from £150,000,000 to £100,000,000 per annum in respect of shipping and financial services; and from £200,000,000 to £50,000,000 in respect of income from overseas investments, we shall have on these figures, and taking pre-war values, to export only £20,000,000 more than we did before the war in order to achieve a balance of payments. I put out these figures, which are the result of some study, because I do not believe in this hypothetical figure of 50 per cent. I am not arguing in favour of reduced international trade. I am arguing that we need not get into a panic; and that, in almost any circumstances, the problem will be manageable. As one hon. Member has pointed out, we have a last trump card which we can always play, because we can always say to any country that if we take their goods they must take ours in exchange. That is a card which in my view will have to be played sooner or later.
The hon. Gentleman the Member for Walsall (Sir G. Schuster), in a most interesting speech, posed the question—what goods can we best export, and to what countries?—and he asked the President of the Board of Trade and the Secretary to the Department of Overseas Trade to direct their attention to this problem. During the 19th century and, indeed, right up to 1914, we concentrated our export trade upon certain industries, of which coal, textiles and shipbuilding were, by tradition, the most important. Let us look, for a moment, at what happened to these industries between the two wars. The exports of cotton and wool textiles fell from £268,000,000 per annum to £104,000,000; of coal and coke from £78,000,000 to £41,000,000; and of iron and steel, and manufactures thereof, from £74,000,000 to £48,000,000. That fall was accompanied by all the misery and unemployment of which hon. Members know. These were very big declines; and they were not offset by any proportional increase of exports of higher grade specialised goods. About £20,000,000 more was exported in machinery, road vehicles, and electrical goods. That was the total offset to these big declines.
We must face the fact that, with all the export credits in the world, there will be no substantial revival of exports in the old "export industries" after this war. Personally, I hope that there will not be. We have to take quite a different view of the economy of this country after this war. We must realise that, in order to achieve a balanced economy in this country in the post-war world, we shall have to transform ourselves into a society which will be at least as much agrarian and industrial as mercantile. The growth of the mercantile society of this country in the 19th century was artificial, to meet an artificial demand which came about with the rise of the industrial system. That is not the situation which prevails to-day. As the result of this change we shall achieve a much happier nation, and a much healthier and more prosperous society than that which existed in the 19th century, although that society achieved great wealth.
The conception of specific export industries is obsolete, as is the conception of export surpluses. As speaker after speaker has pointed out, what we want with other countries is the mutually

advantageous exchange of commodities. As our primary requirements are food and raw materials, so our objective should be to obtain them by exporting the products of those industries which give us, in return, the maximum quantity per unit of labour. There are technical industries in which the skill of our workers gives us the superior knowledge we need, and the maximum amount of imports per unit of labour. Let me instance electrical goods, precision machinery, fine textiles, machine tools, plastics, pharmaceutical products and, perhaps I may be allowed to add, whisky. I know of no other commodity which gives so good a return per unit of labour, and which also gives such a good return in terms of raw materials.
It has come out quite clearly in this interesting Debate that the countries we should concentrate on for our export trade are the countries of the British Empire and of Western Europe. Seventy-five per cent. of our trade lay there before the war. Our trade with the United States was, by comparison, negligible. I do not want to bring in my King Charles' head; but it will have dawned on the President of the Board of Trade that I am referring to what is sometimes called the sterling area, which is a most important factor in this situation. The amount proposed in this Bill is, I think, quite sufficient for our immediate purposes; and I am sure the House listened with great satisfaction to the President of the Board of Trade when he said he had a flexible mind on the point, and would raise it, if necessary, later on. I do think, however, that the premiums in the past have, on the whole, been too high. I think that the charges have really been too high. I do not think that the President ought to come here and crow over the fact that the Treasury has never had to pay a penny. I have discovered, in the course of public life, that nothing is very good unless the Treasury pays something. When I hear that the Treasury has got away without paying anything, it always gives me an uneasy feeling that something is not quite right. I am glad to see the Financial Secretary is here; and, naturally, he will not be expected to take this view, but I feel that the Treasury, in the past, has, over this scheme, been unnecessarily cautious, and a little grasping. It has had to face some shocking losses; but it can still come to us and say, "We have not had to pay a penny on account of the premiums we


have charged, in spite of a world war." That is not a very good argument. We can legitimately hope that, for some time, we shall avoid a third world war; and the President might seriously consider the possibility of reducing the premiums in future.
What about the policy? I referred at the beginning of my speech to our sterling obligations. They are enormous, and there are three ways of dealing with them. We can fund them, at prohibitive cost; we can block them in London, at the expense of our national credit; and we can trade them. This is where the Export Credits Guarantee Department comes in. I am in favour of the third course; and I believe that the Department can be a vital instrument in carrying out this policy. If—and it is an important proviso—we adhere to the sterling group, our sterling debt will create an immense volume of international purchasing power which will, in turn, create a demand for our goods.
Earlier in the Debate there was an argument between my hon. Friend the Member for Moseley (Sir P. Hannon) and the hon. Member for Stoke (Mr. Ellis Smith). I do not know whether either of them realised at the time that the argument was going on, but it was significant. I do not know whether the hon. Member for Stoke was representing the Labour Party, but he came all out in favour of an Imperial policy. He came out in favour of the consolidation and economic development of the British Empire, involving preferences in various forms. That was a most significant thing if he was speaking for the Labour Party, as I imagine he was. My hon. Friend the Member for Moseley has a natural emotional feeling about the Empire; and he was all in favour of the Ottawa Agreements and wanted to keep them going, with preferences and all the rest. At the same time, he said it was desirable that we should have a 100 per cent. reciprocal agreement whatever that may be, with the United States. We can have a lot in this world, but we cannot have this. We cannot have a 100 per cent. reciprocal agreement with the United States, and Imperial preference, running together, at the same time. We really must make up our minds in what direction we are going. As long as we satisfy our requirements in the main within the sterling area, and

confidence in sterling remains, our imports will simply become a set-off against our exports, leaving only the difference in terms of uncompensated export. This we can use to prime the pump for our future trade. It can be regarded by the Export Credits Guarantee Department as collateral security for advances. But we have to face the fact that this policy is not compatible with multilateral free trade.
In order to carry out a constructive trade policy in the immediate post-war period, it seems to me that the control of imports of food and raw materials in this country is essential; and we shall have to face up also to the necessity of exchange control. In combination with our defence requirements, and with the credit machinery established in this Bill, it will enable the Government to exercise a far greater measure of control over the type and flow of both imports and exports, and thus to regulate the balance of trade. The bulk purchases of food and raw materials which we make overseas can also be regarded as collateral security for the medium-term credits granted by the Export Credits Guarantee Department to intending purchasers of goods manufactured in this country. Currency arrangements will also have to be made, in order that our customers may have the widest possible range of choice of the goods they require. They will provide, automatically, the finance of international trade; and I suggest that the Export Credits Guarantee Department can and should be made the agency for carrying out these transactions. Exporters, instead of having to collect money from abroad in foreign currency, will want to be paid in their own currency; and importers, instead of having to remit payment in a foreign currency, will wish to discharge their obligations in their own. The Export Credits Guarantee Department can very well discharge this necessary function. It is to be hoped that bilateral agreements between countries to take payment for their respective exports in one another's currencies, will gradually be extended into a regional Clearing Union. In this respect the Export Credits Guarantee Department have a tremendously important part to play. If you can, through one agency, get paid in your own currency for both imports and exports, it would be of enormous advantage to traders and manufacturers.
I will now say one word about machinery. I had some experience of the Export Credits Guarantee Department before the war, when we were trying to get something for the Balkan countries before they were snapped up by Germany. The criticism that they are terribly slow is well-founded. Arguments went on for weeks, while Germany gobbled up these countries. They went on arguing about small points, while Germany was swallowing the lot. I suggest that the first requisite of this new Advisory Council, and of the new Director armed with this money, is that they must be prepared to act very quickly. Manufacturers cannot be expected to argue for weeks on end about one particular contract. They must be able to come to a decision. They must be flexible; and also fair, as between different sections of the community. The activities of the Export Credits Guarantee Department should in my view be the subject of a periodical report by the Secretary for the Department to this House; and there should be an annual Debate.
As a corollary to this Bill, the United Kingdom Commercial Corporation should be wound up at the earliest possible moment. It is a private monopoly backed by the Government, but not responsible to anybody, and not responsible directly to this House. Here I see a really dangerous tendency. The same thing applies to the Capital Issues Committee. The Chancellor of the Exchequer told me in the House yesterday that we are not to be allowed to know anything about the activities of that Committee. It is also secret, and slow. There is something to be said for free competition, and for Government control publicly exercised with ultimate responsibility to this House; there is nothing to be said for Government controls exercised in secret by private monopolies. There is not, really; and that is the position in which the U.K.C.C. now is. Where does this kind of thing take us? Ultimately it is the path to the Fascist Corporate State, and to nothing else.

Viscount Hinchingbrooke: Does my hon. Friend object to the activities of the corporation, or merely to its constitution?

Mr. Speaker: We must not get into a discussion of that matter on the Second Reading of the Bill.

Mr. Boothby: No, Mr. Speaker. I do not want to press that point. My argument was only intended to show that, with the increase of the credits that might be granted, the U.K.C.C. will become redundant after the war; and that, as a corollary of this Bill, that organisation should be abolished. I am not objecting to its activities. How could I? I know nothing about them. Nobody in this House knows anything about them. I only know that it is backed by the Government; and that is bad. If it is going to be backed by the Government, we ought to know more about it than we do.
This Bill raises, in one of its most vital aspects, the general issue of planned versus unplanned trade. I hope that the era of cut-throat international competition has gone, never to return. I was very interested in the speech of the hon. Member for East Middlesbrough (Mr. A. Edwards), which was very powerful, and was largely directed to that point. If the United States wants to play the game of cut-throat international competition after the war, my answer to them would be "We are not playing this game. We are not going to join in it. We are not putting on the colours. You can play the game by yourself." We need not, and I think we should not, do so. There was in "The Times" recently a classic passage in a leading article which said:
To depress standards of living, or fail to raise them, in pursuit of the will-o'-the-wisp of a free competitive market, means a return to those policies of restricted consumption and hence of restricted production and mass unemployment, which led the world to chaos and to war.
Before I sit down I am going to do a thing which I have never done in this House before, and that is to quote with approval a short paragraph from a book which has recently met with a great deal of criticism and has also had a good deal of publicity. It is called "Why Trust the Tories?" and is written by the hon. Member for Ebbw Vale (Mr. A. Bevan). I would like to quote just a few sentences, with which I fully agree, and which may be useful to us all:
Plenty begets plenty and scarcity begets scarcity. There are two ways of balancing trade between ourselves and other nations—


upwards or downwards. … There is no escape for you once you admit that you must accept lower standards of living in order to export a higher percentage of goods abroad. There is no bottom to that competition but the rice diet.
I think my hon. Friend is perfectly right.
If I have made the speech which I intended to make on the Bretton Woods Agreement, it is not because I have been out of Order, but because all these aspects of international policy are inextricably interwoven and are all part of a single theme. The ultimate solution of the modern world economic problem is to be found in the application of the same principle to the international as to the national field, namely, an increase of effective demand by making the means of payment available to purchase the abundance which modern science and machinery have placed at our disposal. In so far as this Measure contributes to that end, it is good. But, in the final analysis, it is purchasing power, and the productive power of the people of this country, which will be the determining factors in our trade after the war.

4.36 p.m.

Mr. Silverman: This has been a very interesting Debate on economic policy, but it has had very little to do in the main with the Bill which we are considering. Every speaker, including the President of the Board of Trade, has used the Bill merely as a peg on which to hang certain reflections about export trade in the future. I cannot help feeling that the Bill is premature, that it comes at the wrong point, that the Government ought to have made up their minds how they conceive the future and to what economic policy they are going to commit themselves, and also what chance they have of getting that economic policy agreed upon by the United States of America. They have had very little to say about it, and yet what the House and the country are really interested in are precisely the matters which have been discussed with such skill, eloquence and realism by the hon. Member for Walsall (Sir G. Schuster) and the hon. Member who has just spoken.
Since the Government have had nothing to say about any changes, we have to consider the Measure against the background of the old system. We are to think, apparently, of a return to an international

free-for-all, in which individual nations and individual enterprises will be allowed to make the best of the world situation as they find it, to seek customers where they can and to compete with other nations and with other undertakings at home as well as with a variety of other undertakings in other countries, in policy and in prices, and to compete wherever markets may be found. That was the policy of the old machinery. The Bill is nothing but an extension and bringing up-to-date of that old machinery, without any reference whatever to new world conditions or policies. If we are to see the Bill against that background, I should like to ask the Government what progress they can make along those lines.
If, indeed, the world is to return to that kind of standard, if we are to get no kind of planned or controlled economy, either nationally or internationally, if there is to be that economic free-for-all and private enterprise, tempered to some extent by an inadequate system of export licences, I suggest that this country is not in a position to compete. It is all very well for the hon. Member who has just spoken to say, as he did, "In that kind of competitive field we will just stand aside and tell the others that they can compete with themselves and that we are not going to play." One reason for that attitude is not altruism but the simple realisation that in that kind of competition we can no longer hold our own.
Let us look at the situation in the United States. It is necessary to be quite frank about these matters and about issues that arise out of the United States of America and its policies. I do not think the Americans mind it, I think they like it, and prefer to be told in perfectly plain and straightforward terms what people think about things rather than that they should be delicately handled and wrapped up in cottonwool. They prefer to be hit straight on the chin and to have a chance of hitting back. Reference has been made to speeches delivered in America. There are 11,000,000 men and women in the American Services—curiously enough almost the exact figure reached by unemployment in America during the days of the great depression. The first duty of Uncle Sam when the war is over and those people are demobilised will be to find each of them a job. Not merely the President of the United States, but Mr. Wallace, Mr. Stettinius and a good many


other persons have committed themselves, and quite rightly, as we and our Government would commit ourselves in those circumstances, to the pledge that every able-bodied American will be given a job at adequate wages. Mr. Wallace addressed the C.I.O. Convention in Chicago and he put the policy in these terms:
A job for every elector and for every elector a job—60,000,000 jobs.
Let us face this fact of 60,000,000 intelligent and extremely well-educated American citizens linked up to a technologically perfect machine, using material resources that are practically limitless. My hon. Friend the Member for South Ayrshire (Mr. Sloan) said he could not conceive how to increase production without making people work harder. Of course one can. America has done it and will go on doing it. If there are 60,000,000 Americans, with advancing technological perfection of that kind and limitless resources, producing consumer and capital goods, there is no limit to what they can produce. They can supply without difficulty all the needs of the world. There is no need for anybody else to do anything at all.
I happen to represent in this House a constituency that not merely has lived by but came into existence because of an export industry—the cotton trade. I remember the conditions in the weaving sheds in my constituency and all over Lancashire in the years before the war—antiquated and antediluvian machinery, most desperate cut-throat competitive methods, undertaking against undertaking, no cohesion, no plan, co-ordination or agreement. What was the result? The people in Nelson and Colne, after standing by their looms for 48 hours in the mills, most of them idle all the time, went home at the end of the week with pay packets containing on the average from 10s. to 14s., far less than they could have got from the Unemployment Assistance Board if they had stayed at home in bed all the week and had never turned a hand.
Compare that with the kind of cotton industry that the United States have to-day. There are automatic looms, scrapped and replaced every few years, and the men, who are little more than machine-minders compared with the skilled workers in Lancashire, standing by watching their automatic looms produce for nothing like the time that the people in Lancashire

stand in their factories, can go home at the end of the week with 10 or 20 times the wages. Does anybody really suppose that Lancashire is ever going to compete again in the markets of the world, and in a scramble and free-for-all competition, against that kind of textile industry? I speak only of the industry in which I have some personal experience and have the responsibility of representing to some extent in this House. Of course, the same thing applies to a great many other industries, but I do not need to deal with those separately.
It may be asked, How does America propose to be paid for all the production that it has, when it is able, as it is able, to supply all the needs of the world? I am afraid that is a question that America itself has not yet considered, because ultimately one cannot be paid in money; one cannot be paid in anything except goods, and when one comes to consider what kinds of goods America needs, in order to be paid for the goods it exports, one finds there is nothing it needs. How they are to be paid, if they still insist on payment, I do not know. I have heard speakers in this Debate say. "Do not bother about all that; do not bother about this competition in the world from the United States of America. We shall be all right. We shall have all our own Empire." I listened to the hon. Member for East Aberdeen (Mr. Boothby) with great interest, as everybody does when he speaks on questions of this kind. I heard what he had to say about the sterling area and the rest of it, but it seemed to me that the points he was making, so far as they were valid and relevant, relate to purely monetary questions and not to trade questions at all—very relevant indeed to a Debate on Bretton Woods, but not very relevant to a Debate on export trade.
I heard another hon. Member on the other side of the House say, "Why bother about that? Certainly there will be competition from the United States of America, but there will be no competition from Europe—from France, Germany, Central Europe or the Balkans." I understand that the hon. Member who made that speech is, himself, a business man, and I am not. There may be some mysteries in this that have not been revealed to me, but how does he expect all those countries to pay for what is supplied to them? Are their industries never to be reconstructed? Will they be content


to absorb from us, or the United States of America, or anyone else, only what we can export to them. Will they not be concerned with the rebuilding of their own national industries and their own national economy? What benefit would it be to us if that were so? I heard Mr. Wallace in America tell a meeting
an unemployed America means an unemployed world, and an unemployed world is a violent world.
Very true, but a fully-employed America could be attained at the expense of an unemployed world, quite easily, and that would be a violent world. The point I am making is that there is no place for this country, comparable to the needs of this country, in any uncontrolled, unplanned scramble for markets, that our salvation depends on a planned economy, and not merely a planned economy at home, but a planned economy in the world.
We have to make up our minds, first, why we want to export things at all; secondly, what we can export; thirdly, where we are to export to; and fourthly, what if anything—I say advisedly "if anything"—we are to get in return. I do not see any signs that the Government have approached these questions at all, and if the Bill had not been introduced by a Labour Minister I should have been inclined to suspect that the only reason why it was introduced was in order that when an Election comes the Government can say, "Do not let anyone think that we are not thinking about the export trade. We have just introduced a Bill." But certainly they show no signs whatever of having begun to think in constructive terms, of having begun to think of adapting the economy of this country to the changed economies of the world. I think it would have been much better to have deferred the introduction of this little Measure, which may or may not be ultimately necessary, until the House had been invited to accept, and had in fact accepted, policies on these general questions which must lie behind any necessity for a Measure of this kind.
I agree with the hon. Gentleman in his criticism of the use of that phrase "export drive." I am sure the President of the Board of Trade himself would accept that criticism. He himself made it perfectly clear that he did not believe in export for export's sake. It seems to me it ought to be accepted, and our policy

should be based on the assumption, that we export nothing except surpluses, that we export nothing until the needs of the home market, equipped with adequate purchasing power, have first been satisfied, and that we ought, somehow or other, to attempt to reach agreement that other countries will not export anything but such surpluses as exist after the needs of the home market have been met on a scale which will satisfy a standard of living commensurate with the productive capacity of the modern world. I do not know whether any negotiations are going on about that—whether there are any talks. I know there have been conferences recently. I am not impressed, and I do not think anyone is impressed much, by the results or the kind of agreement reached. What seems clear is that the United States of America at any rate is going all out to produce, produce, produce, export, export, export, and in the absence of any internationally-agreed plan and control there is no reason in the world why they should not.
If people ask how things ought to be paid for, I should say that ultimately, once you have exported sufficient surpluses to balance your imports of war materials and anything you cannot produce for yourself, any further surpluses ought to be exported for nothing—[Interruption.] They need not be kept at home once you have satisfied an adequate standard of living. If there are surpluses above that you ought not to stop production, but go on producing, and use those surpluses to satisfy the needs of those vast portions of mankind whose standard of living is so far below what it might be, and far below ours. There are vast markets in India and China, and by markets I mean places where our goods could be consumed provided they are surplus ones. If we insist on sending goods to those areas only, on condition they send us back consumable goods that we can use ourselves, we can only export at the expense of our working population at home. The use of surpluses ought to be world-wide, under some central world authority, and used in order to raise the standard of living of the world as a whole. There is no need for a scramble, for a free-for-all competition.
The world is faced with a choice of having a controlled and planned world economy, using the world's resources for the benefit of the world's population, or


an international conflict all over the world for markets, with ever-increasing unemployment at home, and a lower and ever lower standard of living in the various countries of the world, mass unemployment as it was before, and ultimately a worse world cataclysm than any we have known. It seems to me it is time, now, that we have reached this stage in the military process of the war, for the Government to get down to constructive economic policies, and to let the House and the country know what they are.

4.55 p.m.

Mr. Spearman: The most outspoken criticism of this Bill came from my hon. Friend the Member for Penryn and Falmouth (Mr. Petherick). Although he is not in his place I would like to refer to what he said. If I remember aright, he said that these export guarantees were of little use before the war, and would be of less use after. He then proceeded to paint a sad but a realistic picture of our financial position, which as we all know is due to the fact, as the Chancellor has told us, that we went into this war with all we have got. It seems to me that the more serious our financial position is, the more need there is for exports in order to get the imports we must have by which to live. I am not one of those who want to see an unlimited increase in State participation in the businesses of our country. Indeed, I think there is perhaps too much dependence upon State help in many quarters, and I would rather see manufacturers call for the removal of all restrictions, so that they could go out on their own and fight for markets, rather than call for protection under which they can shelter.
It seems to me there are certain functions which the State has to do for business, and that the State should only do those things which only it can do, or which it can do immeasurably better than the individual. I would have thought that these export guarantees represented exactly one of the functions which the State could do very much better than the individual. It is a question of covering risks—political risks, currency risks and risks of blocked currency, which it is much easier for the State to assess than for the individual. Further, after the war we are likely to have a "sellers' market" in which it will probably be much easier

to sell than to buy. If the Government's full employment policy materialises, as I believe and trust it will, then, undoubtedly, it will be much easier to sell in the home market. As selling in the home market produces much less difficulties in many ways than export trade, and as most manufacturers who export also do business in the home market, there must obviously be a temptation to sell where it is easiest to do so, here at home, whereas what the State needs is that they export. Therefore, as it is in the interest of the State, it is right that the State should take a hand, and to my mind it is far better that the State should set about removing disabilities rather than what it might otherwise have to do—subsidise in order to produce the exports.
The other hon. Member who was at least lukewarm about this Bill was the hon. Member for East Aberdeen (Mr. Boothby). I think that my hon. Friend thought an export drive quite unnecessary, because he thought we could depend upon a bilateral system, that is, barter. I do not think he altogether practises what he preaches. We all know that he has a tremendous output of economic publications, but I do not think that he goes round his farmers in East Aberdeen suggesting that he should instruct them in economics, and, in exchange, receive from them the wheat with which to make his bread, or the wool with which to make his clothes. He prefers to sell his ideas to the newspapers for money, and, with that money, he buys his bread ready-made and his clothes, which may be ready-made or not. I would like to say to him that we do want an export drive, and that the object of it is to get money, so that that money can best be transferred into those goods we need. If we are to get the best value, we have got to sell our goods where they are most wanted, and buy where we buy cheapest, and thereby get the best value for our money, that is, buy in one market and sell in another. I think it might be possible to buy oranges in Russia, we should really have to pay a colossal price for them, but, if we can sell goods to Russia and get the money with which to buy oranges in California, we shall clearly be better off. It might be possible to buy caviare in California, but, if we can sell goods there to get the money to buy caviare from Russia, it is a better plan. At some price we might be able to sell coal in Poland, but as they produce


coal very cheaply there, it would only be at a price ruinous to us.
May I real this quotation from a very eminent economist?:
As they give us their custom, it is pretended we should give them ours. The sneaking arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire; for it is the most underling tradesmen only who make it a rule to employ chiefly their own customers. A greater trader purchases his goods always where they are cheapest and best, without regard to any little interest of this kind.
In conclusion, I strongly support this Bill, which, I agree, is only a very small step; it is a step towards helping our export trade, and, unlike the hon. Member who spoke a short time ago, I want to see our export trade increased by at least 50 per cent. I think that, before the war, we were importing about £800,000,000 worth of goods. I want to export enough, not merely to import that amount but very much more. We are, after all, hoping for an increase in the national income from somewhere about £4,000,000,000 to about £8,000,000,000. We hope that wages will be maintained at a level very much higher than the pre-war rate. We are confident, I hope, that we are not to have huge numbers of unemployed. All that means a far greater demand for goods, not only to be consumed, but also raw materials such as rubber and tin, which it is more or less impossible for us to produce, and which we need to increase our standard of living in this country. The more that we export the more, in turn, must we import of the materials necessary to make the exports. I strongly support this small measure of assistance in the all-important task of increasing our export trade.

5.6 p.m.

Lieut.-Colonel Gibbons: I had no intention originally of taking any part in this interesting and wide Debate, but I think one important matter, which is actually in the Bill, has escaped the notice that it deserves. I refer to the Clause which extends the power to give guarantees covering contracts for constructional work abroad. It has been mentioned by the hon. Member for Stoke (Mr. Ellis Smith), but, since then, it has not been brought before the House. I think that that is a most important Clause, and one on which the Government deserve congratulation and support.
I believe that there is a very great trade in front of us, in capital plant. The power-house which my hon. Friend mentioned is an example of the type of thing I have in mind. When I say "trade," I mean, not long-term investment in capital plant, but trade paid for in the ordinary way, in two or three years, which is going to be very important to us, for two reasons. First, the markets lie principally within the Empire. The Dominions and India, during the war, have accelerated the process which has been going on for a long time, by which they make their own secondary goods, and, to some extent, their heavy goods. Their manufacturing methods are based upon ours, and our plant is wanted by them. We are ready to give the same credit facilities for that plant as we do for our consumer goods. Secondly, capital plants of this type, designed in this country, along with spare parts sent out from this country to places where the ordinary materials are bought in the country of the customer, has this great advantage—that a very large amount is made up by wages. The capital plant value is largely represented by the skill of our technicians and the work of our drawing offices and our engineers generally. The goods we send are high-grade goods, and the export trade we want is high quality trade, not the cheap, sweated labour stuff, but trade based on our skill and experience, which exceed those of any other country in the world.

5.9 p.m.

Mr. Woods: The Bill has received very little criticism, and complaint has been of what is not in it, rather than of what is in it. I think the House is fairly unanimous on this matter. I have been very interested to discover from the Debate that hon. Members on both sides are now wide awake to the fact that this Bill, in itself, is not sufficient for us to go forward on these problems of international commerce in post-war years. The hon. Member for Walsall (Sir G. Schuster), I think, epitomised the feeling of the House as well as anybody in the Debate, by saying that it was good as far as it went, but just a drop in the bucket, or words to that effect. It is, in itself, I think, absolutely vital that the House should take some such step as this by extending—though I think the extension is not really sufficient—the sums


which we can give in credits for overseas trade. That is by no means satisfactory to the House or to the country. Unless the Government supplement this Bill with further realistic appreciation of the problem confronting the post-war world, these new advantages will be largely neutralised.
Such a Bill as this would have been inconceivable before the last war. Private enterprise could look after itself, insurance companies could come in where necessary, and international trade flourished. The 1919 Bill was introduced very largely as a temporary expedient, when the condition of the world, after the last war, was such that things were dislocated and it took time to settle down. Therefore, it was necessary for the Government to come in and guarantee export credits. It did not prove to be just a temporary measure but continued to function in the inter-war period because of its usefulness. There was nothing idealistic about it. It continued because it was found to be necessary and it helped very substantially, as the figures proved, and although it did not save us from the terrific slump at the opening of the last decade, it did during that period provide employment for workers in this country, many of them in the engineering industry who otherwise would have had a very thin time indeed.
Just as at the end of the last war it was found necessary to introduce the system of guaranteeing export credits, so things have moved on in many ways, and it is not sufficient in 1945 to come along and say, "We are doing all that is necessary by extending the amount, because of inflation and so forth." Much more needs to be done. Full credit has not been given in this Debate to the activities of the Government in various parts of the world and especially to consuls and commercial attachés, who have done and are doing a very fine piece of work, though within limitations. There should be appreciation of the support of the Government in their work, guiding their policy along lines conducive to peace and goodwill among the nations, rather than that type of exploitation which produces distrust and also lays the seeds of warfare. The necessity for action on the lines indicated by the provision of helpful information to private traders has been pointed out by one or

two speakers. So long as we have private enterprise and substantial business concerns carrying on export trade, it is valid to suggest that they should have all the expert advice and assistance it is possible to put at their disposal while the system continues. But further developments have taken place, and Russia, incidentally has loomed very large in this Debate. The position of trade with Russia is totally different from what was envisaged in 1919 when the export credits scheme was first introduced. Experience in Russia has proved that a democratic organisation and a State controlled economy can be dealt with safely by commercial firms, and there has been a surplus of £1,000,000 in the Fund apparently derived from the success of the undertakings financed in Russia.
Those of us who have been privileged to see something of the devastation suffered in Russia, not merely in towns, but over the countryside, covering thousands upon thousands of miles, where practically everything capable of being destroyed has been destroyed, have come back with a feeling of the need for substantial aid to a country like that, and the same applies throughout Europe. To have such relationships that we can supply the innumerable things which will be vital and urgently necessary involves very little risk as long as there is some form of stable government. The same is true of countries where there has been practically no disruption but where the standard of living is so appallingly low that, although there are millions of people, their purchasing capacity is practically nil. It has been stated that if India, with a population of round about 400,000,000, had the standard of living of its people raised by £1 per annum per head, it would enormously increase trade.
The same is true—and there you have devastation as well—throughout China. There are 500,000,000 people and the condition of vast numbers of them is very low indeed. Here is a problem with which tradesmen and business men cannot compete as it is right round the other side of the world. There is the question of language and other difficulties and there seems to be little stability about the Government. Our Government, in a case like that, should give advice to the Council so that effective guarantees could be secured. It cannot be done by the routine business of two people trying to exchange


some commodity. The Government must be brought in, and from what I have been told the present Government appreciate this very clearly. There are problems of exchange values involved. If we want to work together for the improvement of both our peoples, then through this system of machinery, if it develops, substantial assistance could be brought to those millions of people.
In the conception of commercial relationships, we have to get beyond the old idea that all this trade is merely for profit. Democratic organisations are growing up in the various countries which are nationalist and patriotic, and which conceive of the possibility, when modern industry works with proper plant and machinery, of the standard of living being immeasurably raised. If we study the history of this and other countries, where industrialisation has taken place, we find that industrialisation carried out at a rapid pace has made a complete dislocation of the economy and caused considerable suffering on the part of most of the people. Consequently, although people desire to see industrialisation, which means substantial orders for capital goods, they are concerned lest industrialisation should fail to bring in its wake a raising of the conditions of the people. If the Government appreciate the importance of this matter they will see that the investment will be doubly sound. If there is the possibility of building this Fund so that the industrialisation is specifically designed to raise the standard of living of the people who are being industrialised, then it will be to their advantage and to ours.

5.20 p.m.

Mr. Harcourt Johnstone (Secretary to the Department of Overseas Trade): We have had, I am sure all of us will agree, a most interesting Debate. It has been so to me at any rate, although I must confess that the main interest in it lay in the discussion of subjects with which this Bill is in no way, or hardly in any way, concerned. During the afternoon the Government have been asked a great many questions on a large variety of subjects. These all dealt—I will put it as widely as possible—with economics, and a great many of them dealt with trade. Not a very great many dealt actually with the points of this little Bill. I have views, and so have the Government, on the subjects which have been mentioned by hon.

Members in the larger regions of policy, but I must confine myself in my reply to dealing with the Bill. I cannot, even if I wished to do so, give even in outline the story of the Government's intention over the whole general economic field. Therefore, I must ask hon. Members who, in some cases, have practically confined their speeches—I do not in the least complain of it because this is a rather dry Bill that we are being asked to pass this afternoon—to much wider aspects of policy and economics in the foreign trade field, to forgive me if I do not follow them. There will be other opportunities, I am sure; indeed, I wish my hon. Friend the Member for East Aberdeen (Mr. Boothby) had conserved his most interesting speech, as he told us that he had meant to, for a Debate on Bretton Woods. I should then have had much pleasure in trying, if I were allowed, to say something about it, but this afternoon I cannot go into the very wide fields which he explored. I can only say that I hope the report of his speech in HANSARD will have a very wide circulation.

Mr. Boothby: It ought to.

Mr. Johnstone: On the subject-matter of the Bill itself, many hon. Members who have spoken to-day have naturally raised the same points. I hope, therefore, that they will forgive me if I do not take them individual by individual, but rather deal with the points themselves in order.
The first thing that hon. Members were inclined to query, and which indeed I have seen queried outside, in the Press and elsewhere, was the total amount mentioned in the Bill. Although I was supported by my hon. Friend the Member for East Aberdeen, and I am grateful for his support, I think the general tendency was—certainly among three or four of the hon. Members who mentioned the subject—to say that it was a rather beggarly sum. I do not think it is beggarly, but it certainly is not excessive and, as my right hon. Friend said, he will be perfectly willing, when we have seen some of the post-war results, to increase the total amount if necessary. I feel quite sure, however, that in the months after the war, this total should prove ample. Indeed, I shall be very happy, I confess, if in the first year, anything like full export is resumed, and the whole of this is, in fact, needed.
My hon. Friend the Member for East Aberdeen made one suggestion with which I would like to deal without going into his speech, that the Export Credits Guarantee Department was a very happy piece of machinery for controlling our exports, I think he mentioned imports, though I do not quite know why. As at present advised, it is not for that purpose that we propose to use the Export Guarantees Department. The clients who come to the City in search of policies, will not be told that there is no policy for them unless they are sending the stuff to A, B, or C country, or told that they can have a rather better rate of premium if they will take the Government's advice and decline the business offered them by the citizen of A country and search round for a citizen of B country to give the order instead. I think we should be going very far outside the intention of the various Acts of Parliament if we were to begin to use the machinery of the Export Credits Guarantee Department for direction of exports. Incidentally, I think that was the question raised by my hon. Friend the Member for Pudsey and Otley (Sir G. Gibson) and it applied to some extent to the argument of my hon. Friend the Member for East Aberdeen. It is not chiefly upon long-term stuff that the business of the Department is done. For many years past—though I expect to a smaller extent in the post-war years—the bulk of the business of the Department has been done in consumer goods, and the ratio has varied somewhere between 10-1 and 6-1. So that there, again, it is really to the very ordinary, commonplace, day-to-day, international traffic in goods that the service of the Department chiefly applies.
After the total amount, I think that the point in the administration of export credits, which interested the larger number of Members, was the rate of premium and the alleged profits made by the Department, and, after that, came the question of the terms upon which the insurers should be allowed to insure their business. The rates of premiums and of profit are very commonplace, I think, and that is proved by the fact—there is nothing very extraordinary about them—that with the exception of some fairly large chance profits, upon long-term business, the short-term business has just balanced itself over a long period. Since

the war, of course, the short-term business has shown a considerable loss which has been made up out of the accumulated profits—the reserves—which were made on certain long-term orders. I must say I do not think that £1,500,000 is an exorbitant profit to have made over 25 years in relation to the amount of business I would not be surprised if, before the end of the war, that profit or reserve has been reduced still further. I quite agree, however, with hon. Members who say that the object of the Export Credits Guarantee Department should not be to make a profit, or to charge exorbitant premiums for the sake of showing a glowing balance-sheet or profit-and-loss account, but to do the thing as cheaply as they can and in as businesslike a way as they can, and to show, over a long period, neither a loss nor a gain to the State.

Mr. Petherick: Is the £1,500,000 reserve in respect of the present scheme, or does it cover the whole period of 20 years, allowing for losses on the two previous occasions?

Mr. Johnstone: It is the nett position since the Export Credits Department was started. The next subject of complaint against the Export Credits Department—and it is a very common one, we have met it all over the country, and I am not at all surprised that Members have raised it—is the fact that the Department asks traders to insure the whole of their business. That is not quite so vicious a system as some Members seem to think. First, it protects the Department against what could become a very common form of fraud—the man of straw coming along and asking for a policy on a particular transaction on a bad market. It is true that the Department ought, on the whole, to be able to sort out the man of straw from the honest man, but it is not always possible. People are deceived sometimes. Even acute men in the City are not "unsubject" to deception by those determined enough to defraud them. It prevents a man being able to say, "Here is a shipment to a particular market. What is the rate?" He has to disclose what the whole of his business is with the rest of the world and that, in itself, is some guide to his trustworthiness.
In addition to that, the spread of business that the Department now asks for, enables a lower and level premium to


be given than could possibly be given for one bad market. Supposing premium for market A was 15 per cent., for market B 8 per cent. and for market C 6 per cent., and then perhaps there were a dozen markets tacked on which, taken by themselves, would be a 1 per cent. premium or less. If you add them together and level them out I do not think the insurer would lose. Indeed, many of our exporters much prefer it, and you do not get the unfortunate result of adding to the price for your difficult market a very large premium which may prevent your doing business, whereas a small amount, added to the good markets, by no conceivable chance can affect the price so much as to prevent any business at all.

Sir G. Gibson: Supposing it happened that in markets B, C and D the premiums were 8 per cent., 6 per cent. and 3 per cent. respectively, and it was a competitive market, the exporter, by the imposition of these premiums in safe markets, might lose business.

Mr. Johnstone: I have said that I thought the variation in premium which would affect a dozen A plus markets, if you take account of the premium charged for the bad market, would not be sufficient to prevent business being done. A half per cent., or something of that kind, will not affect something being done. I have recognised that there is a lot of feeling about this, and I must say that I have been rather touched by the pleas of industrialists in every part of the country. It has often been represented to me that they should have an alternative arrangement and I propose in future—this is an administrative question and, of course, is not in the Bill—to modify the existing arrangements to this extent: that provided a reasonable spread of business is submitted for cover, that is to say, people do not come in and say, "I would like to do one transaction on one market, with one shipment"—which I think is very dangerous—exporters will be able to exclude markets the risk of trading in which they are prepared to assume themselves. Naturally, risks arising in a selected group of countries for which the exporter desires guarantees will be covered at a higher rate of premium, inevitably, than that payable by the exporter who insures the whole of his turnover. I think that concession is desired by the trading community, and I

am glad to give the assurance that, in future, the Department will administratively act on those lines.
Another point was raised during the Debate with which I, personally, have infinite sympathy, namely, that there should be simplification of the wording of the policy. I must confess that I have never understood it myself, and I can hardly see how anyone except a professional could, because it is so difficult to follow. I am not quite certain that it is drafted in the right order—

Sir G. Gibson: Does the President of the Board of Trade accept responsibility for that?

Mr. Dalton: Yes, for everything.

Mr. Johnstone: I am not quite sure that the clauses are in the appropriate order, but the whole question is being looked into both in the Department and with the legal authorities who, of course, must have the final say in this matter. It has been pointed out to me that although one might simplify the wording of the policy, so that it could be understood by people like hon. Members and myself, in doing that one might create, in the policy, a difficulty which would be fatal in the courts. We must be very careful to see that that does not happen, but in so far as the wording of the policy can be amended, so as to remain safe and yet at the same time comprehensible it shall be done.
A question was asked about repudiated contracts. The Department have never covered repudiated contracts, and although I have looked at this most sympathetically—it has been more than once brought to my attention—I feel that the chances of deliberate fraud are too great, to allow the Department to insure this risk. A repudiated contract, in certain markets, is by no means uncommon, and I think it is fair to say that in the majority of cases where it is not uncommon it is the ordinary practice for the client and his supplier to come to an agreed arrangement. It is regarded as a normal risk in certain cases. I think the number of cases in which this special insurance would be of real use to British manufacturers is very small, but I am fairly convinced that, if it were introduced, there would be a large number of gentlemen, if you like to call them so, who would be eager to take advantage of it in order to enrich


themselves fraudulently at the expense of the taxpayer. Therefore, at any rate for the time being, I am afraid I cannot consider the addition of insurance on repudiated contracts to the other risks which the Department insures.
Then there is the question of brokerage. The Department pays brokerage in the same way as anybody else does. It is a recommendation, I think a reasonable one, of the Advisory Committee that the Department should in matters of this kind behave like anyone else, and that someone who brings a policy to the Department should draw the same commission as insurance brokers normally do when introducing policies to any other company. I do not think it is unfair. I do not know why they should take the trouble of doing this business for nothing. The brokerage is not very large—about eight per cent. on the premium—and on the whole it is much better that the Department should behave in the normal way in these transactions.
I heard a criticism, possibly justified in certain cases—I can easily conceive that it might be—of the time that it takes to give decisions when policies have been asked for. If it is a long term matter it obviously must take a long time. Very large sums are involved sometimes running up to a much as £15,000,000. The opinion of a great many people, and of a number of Government Departments, has to be taken, and I think it is not unreasonable that transactions of that kind should take a very considerable time indeed. In the case of short term stuff I do not think there is much delay. When this insurance is, as it generally is, a question of weighing-up the credit-worthiness of some foreign importer, it may take a very considerable time to get the information. If the man is well known, it is easy, we probably know all about him already, but, if he is not well known, it takes time. It is no good making shots at it. We want to be as accurate as possible and, although we are well served by friends abroad, I do not think it can be expected that that kind of information can necessarily be available in a short time, unless it is already in the Department, as it often is.
I am proposing to increase or improve the foreign representation department. One high official of the Department has

been to South America and to such of liberated Europe as he can get at, and another has been all over the Middle East, and they are shortly making representations to me as to the staff that they consider would be adequate for the representation of the Department overseas. That in itself should make a considerable difference to the time taken in these difficult cases of credit-worthiness. To be able to refer direct to these gentlemen and to get a telegraphed answer back must make a considerable difference in the administration of the office. I hope that this innovation will prove to be a success and will be of real service to exporters.
The hon. Member for Chesterfield (Mr. Benson) hoped that the services of the Department would get better known. For many years past, I think from the beginning of the scheme, we have been disappointed at the response of the exporting community to the services offered by the Department. They have been improved continuously and we hope to make them more attractive still after the war, but it is still a very small proportion, comparatively speaking, of our export trade that is covered by the Department's guarantee. Many manufacturers and exporters feel quite able themselves to carry the risk that there may be and, as we are not in this for profit, we do not mind whether they take the Department's facilities or not, but we still feel that perhaps there are people who would be more ready to export, and would take more trouble over developing their export trade, if they knew more of the facilities offered by the Department and were, therefore, more ready to take advantage of them. I have already had some discussions in the Department about getting the services better known, and I hope that, when it is possible to do trade on a more extended scale, we shall have succeeded in making the facilities better known to the exporting community.
The hon. Member for Stoke (Mr. Ellis Smith) asked whether branches of foreign firms situated in this country enjoy these facilities. The answer is "Yes, provided the stuff they seek to export is made by British labour." Though it is marketed by foreign capital, so long as it is manufactured in England the exporter receives exactly the same treatment as that of native firms, and I think that is inevitable and right. We should cause a great


deal of unnecessary unemployment if we withheld these facilities. It is impossible for the Department, in doing that, to differentiate—I do not see how we could draft a Bill to enable them to do so effectively—between goods going to what one might call a politically, psychologically and militarily safe destination and those which might perhaps be destined in the quite distant future for use by an enemy.

Mr. Ellis Smith: What I had in mind was that a number of big monopolies came to an arrangement with foreign firms prior to the war which admittedly had a detrimental effect on our trade. I was asking whether any of these foreign subsidiary companies or big monopolies were allowed to use facilities for trading in the way I mentioned.

Mr. Johnstone: I cannot tell my hon. Friend off-hand whether they were; all I can say is that under the existing legislation they would be. My hon. and gallant Friend the Member for Bilston (Lieut.-Colonel Gibbons) asked me about contracts and public works abroad. The Bill provides an increased amount for that purpose in the sense that it does not lay down so rigid a criterion for what is to be considered an eligible public work abroad. Many of these works involve the payment of a great deal of money for foreign labour, that is labour on the spot where the bridge or the electrical works or whatever it is is to be erected. There was a fairly tight limit on the amount to be included in that sort of expenditure. That has been loosened. In the same way we have increased the percentage that can be claimed in respect of what I may call exploratory work, plan making and that kind of thing which often forms a substantial part of a big contract.

Mr. Baxter: Before my right hon. Friend comes to his peroration, will he deal with the suggestions of my hon. Friend the Member for East Aberdeen (Mr. Boothby) that there is no need for an export drive at all? Will he consider repudiating this and giving industry a clarion call?

Mr. Johnstone: I have not got my trumpet with me, but, so far as I understand my hon. Friend, I think that I do repudiate him. I would like, however, to read his speech first. I think that he underestimates very largely the import-

ance of our export trade immediately after the war. He excuses himself by saying that we can do the same thing by cutting down our imports, but we do not buy our imports out of vice; we buy them because we want them. Cutting down our imports is an effective way of lowering our standard of living. That is not the object of our export trade or, indeed, of our financial policy as I understand it.

Mr. Boothby: All I am really arguing against is the ludicrous conception of building up a great export surplus, which prevailed for many years before the war. I want to balance exports with imports.

Mr. Johnstone: That is a matter for argument. I am rather in favour of my ancestors having built up a good surplus, because it enabled my hon. Friend and I and all the rest of us to get a great deal of stuff without working for it.

Mr. Boothby: At whose expense?

Mr. Johnstone: At the expense of our ancestors, and very welcome it was. I cannot trespass any further into these realms because my time is short. In conclusion, I want to say something about Russia, which was mentioned by many speakers. There seems to be abroad some impression that this Bill does not encourage and, indeed, will prevent any kind of export arrangements with Russia. It was under the predecessors of this Bill that our business with Russia was done, and there is nothing in this Bill to prevent business being done with Russia in the future. This Bill is, I think, an improvement on previous Measures in regard to doing business with Russia on better terms both for them and for us. My right hon. Friend has often said that one of the objectives of the Government is to do an expanding trade with Russia in the future. I am convinced that, although this Bill may not do a great deal immediately to increase our trade with Russia, it can in the future increase our trade with that country, just as much as it can increase our trade with other countries in the world.

Question put, and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the Whole House.—[Major A. S. L. Young.]

Committee upon Tuesday next.

Orders of the Day — EXPORT GUARANTEES [MONEY]

Considered in Committee, under Standing Order No. 69.

[Major MILNER in the Chair]

Resolved:
That for the purpose of any Act of the present Session to increase the limits imposed by the Export Guarantees Act, 1939, upon the liability which may be undertaken by guarantees given under Section one of that Act, to provide for the giving of guarantees for the purpose of encouraging the participation of the United Kingdom in external trade transactions, and for purposes connected therewith, it is expedient to authorise—

(1) Any increase in the sums payable out of moneys provided by Parliament, and charged, in default of such payment, on the Consolidated Fund, under Section six of the Export Guarantees Act, 1939, or under Section five of the Overseas Trade Guarantees Act, 1939, being an increase attributable to the provisions of the said Act of the present Session—

(a) raising to two hundred million pounds the limit imposed by Sub-section (1) of Section two of the Export Guarantees Act, 1939, upon the aggregate amount of the liability at any time of the Board of Trade in respect of guarantees given under Section one of that Act and under the Export Guarantees Act, 1937, and the enactments repealed by the last mentioned Act;
(b) raising to fifteen million pounds and five million pounds respectively the limits so imposed by paragraphs (a) and (b) of the said Sub-section (1) upon the aggregate amount of such liability in respect of the guarantees therein referred to;
(c) repealing the restriction imposed by Sub-section (2) of the said Section two upon the liability of the Board of Trade in respect of guarantees given in connection with the execution outside the United Kingdom of works and services in connection with the export of home produced goods, and the corresponding restriction imposed, in relation to guarantees under the Overseas Trade Guarantees Act, 1939, by the proviso to Sub-section (3) of Section one of that Act.

(2) The payment out of moneys provided by Parliament, and, in default of such payment, the charge on the Consolidated Fund, of any expenses incurred by the Board of Trade in connection with guarantees given under the said Act of the present Session for the purpose of encouraging the participation of the United Kingdom in external trade transactions, subject to the following limits, that is to say—

(a) that the aggregate amount of the liability at any time of the Board of Trade in respect of such guarantees shall not exceed the sum of fifteen million pounds; and
(b) that any such liability shall be included in the aggregate amount of the

liability of the Board, to which the limit of two hundred million pounds herein-before referred to is applicable.

(3) The application to securities guaranteed under the said Act of the present Session of Section three of the Overseas Trade Guarantees Act, 1939 (which enables the Board to acquire securities guaranteed under the principal Act).
(4) The payment into the Exchequer of any sums received by the Board of Trade in connection with any guarantee given by the Board under the said Act of the present Session, or under the Export Guarantees Act, 1939, or the Overseas Trade Guarantees Act, 1939, as thereby amended.—(King's Recommendation signified.)—[Mr. Dalton.]

Resolution to be reported upon Tuesday next.

Orders of the Day — OLD AGE PENSIONS

Motion made, and Question proposed, "That this House do now adjourn."—[Major A. S. L. Young.]

5.56 p.m.

Mr. Lipson: I desire to raise a very human problem. It concerns certain old age pensioners who are beneficiaries under the Pensions (Increase) Act of 1944. The purpose of that Act was to give some modest increases in pension to certain retired servants of the State and of local authorities and to former members of the Irish Constabulary. The amount of the increase was very small. It was intended to apply only for a limited period, and the Act comes to an end at the end of this year. The object of the Act was to meet the increased cost of living. It has been found in practice, however, that the Act is penalising certain non-contributory old age pensioners as compared with other beneficiaries under the Act. When Parliament passed this Act it intended that all those who came under it should receive the full benefit of the Measure, such as it was. In practice, that has not happened and those who are suffering a deduction in consequence of the Act are the poorest of those who come under it.
Who are the non-contributory old age pensioners? They are men who, to qualify for an old age pension, must satisfy two conditions. First, they must have exceeded the Psalmist's allotted span of life; unless they are over 70, they do not get any benefit. Also, they must be very poor, because unless their income is very limited in amount, they do not get this old age pension. I am


not asking to-night that any more money should be spent because of this Act than was originally intended when Parliament passed it, but I say that it is not right that because of benefits received from this Act, those old age pensioners should have their old age pensions reduced.
I understand that there are instances where this is taking place all over the country. I wish to draw attention to-night only to two examples from my own constituency. They come to me from the local pensions committee and the facts which I will put before the House have been sent to me—

It being Six o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Cary.]

Mr. Lipson: I was saying that these facts have been sent to me by the clerk to the committee who is also the town clerk of Cheltenham, a responsible official whose facts can, I think, be accepted as correct.
The first concerns an old age pensioner and his wife whom I will call Mr. and Mrs. A. They were each receiving the old age pension of 10 shillings a week, and the man had his civil pension. Under the Act of 1944 he is entitled to an increase of £27 5s. and he is getting it, but in consequence of that increase the old age pensions of himself and his wife have each been reduced by 4s. a week. The result is that though he receives £27 5s. under the Act, he and his wife between them lose £20 16s. of their old age pension; that is to say that a benefit which Parliament intended should be worth £27 5s. to him and his wife, is reduced to £6 9s. Parliament did not intend that, and I do hope that something will be done to make that sort of thing impossible.
Let me give one or two facts about this old man and his wife. He is a confirmed invalid. Though these old age pensioners reach the age of 70, unfortunately their health and their financial circumstances are not such that they can enjoy retired leisure in comfort. This particular man suffers from epilepsy, and needs special attention and treatment. His wife is nearly blind. I would remind the House that these old people are having a very unhappy time because of war conditions.

Like all of us, they are exposed to the hazards of enemy attack from the air. They too, have their anxieties with regard to their dear ones who may be fighting. The cost of living is such that they have an awful struggle to make ends meet. Luxuries are quite impossible. Are these the people that we want to single out for an economy of the kind that I have indicated?
The second instance is Mr. B, who was also getting the old age pension of 10s. a week. He is entitled, under the Act, to an increase of £14 4s. a year. He is getting that, but £10 8s. a year has been taken from his old-age pension, with the result that instead of getting £14 4s. a year, which Parliament intended, he is actually benefiting only to the extent of £3 16s.

Captain Prescott: The hon. Member is directing the attention of the House to a particular instance. Does he not realise that it is merely typical of the general niggardliness and cheeseparing manner in which old-age pensioners are treated, and that this case could be multiplied by many others?

Mr. Lipson: The hon. and gallant Member has quite properly drawn attention to the fact that old age pensioners get a very raw deal under present conditions. Many of us have said so again and again, and in company with other hon. Members, I welcome the support we have received from my hon. and gallant Friend who has just intervened. This particular man has applied for a supplementary pension, and has been awarded 2s. 6d. a week. The net result, though he gets his 2s. 6d. supplementary pension, is that he is 1s. 6d. a week worse off than if the cut in his pension had not taken place. Does the State want to save that 1s. 6d. a week? at the expense of this old man? It might buy him nearly half an ounce of tobacco. Would we not all be glad if that were possible? Who is he, what is his career? He is a retired Post Office employee, and has served in two wars. He fought in the Boer War and in the Great War, and this is the treatment which has been meted out to him. The old-age pensioners were very glad when this Act was passed. It was not much, but it was something, and it seems a tremendous shame that such pleasure as they got, and that such expectation and hope as were raised by the


Act, should have been spoiled and ruined in this way. It causes a great deal of bitterness.
I refuse to believe that the Chancellor of the Exchequer cannot find some way by which this difficulty could be overcome, so that this incredible meanness should not be perpetrated on these old people. We know that during the war the Chancellor has tackled some very big problems and tackled them well. He is a big man. I believe that he has not only a fine brain but a big heart. I am quite sure that if he could realise how much unnecessary misery, suffering and hardship is caused to old-age pensioners, he would turn his attention to this, even though it is a comparatively small problem compared with many of the big ones with which he has to deal. But it is really a very big one to the people concerned. I appeal with confidence to my right hon. Friend who is to reply, to say that further consideration will be given to the matter, and that it will not just be left where it was by the answer given by the Chancellor to my Question.
Really it is incredible to think that our power for effective action is such that when we are faced with an obvious wrong and injustice of this kind, when something happens as a result of the passing of an Act of Parliament which no one intended, we should say that "Nothing can be done; very sorry, but it must be left there." I ask that it should not be left there, but that some statement should be made which will give hope to those who are suffering in this way that a way will be found to prevent this sort of thing from happening.

6.10 p.m.

Mr. Evelyn Walkden: I believe the hon. Member for Cheltenham (Mr. Lipson) has not only rendered a service to old-age pensioners, but given a public reminder to Members of Parliament as well, of the effect of Acts of Parliament which are not properly understood by them when they are passing through the Legislature. If these Benches were filled to-night and there could be a kind of inquiry of every Member of Parliament who was present when the Pensions (Increase) Act, 1944, was being considered, I question whether one hon. Member could say that he believed or intended that it should be applied as it has been in the

case outlined by the hon. Member for Cheltenham. My hon. Friend says he could have told us. I believe, on reflection, there are one or two of us who could, including perhaps the hon. Member for Rugby (Mr. W. J. Brown). We were on a deputation to the then Financial Secretary of the Treasury, now chairman of the Conservative Party. When we met the right hon. Gentleman, he was sincere, as he always has been, and he said, "We will try to do something." The Chancellor of the Exchequer did that something and we accepted it, although the hon. Member for Rugby asked that there should be a step up in the ratio of income.
It is a bad thing that we Members of Parliament should be reminded in this manner, but the defence of the Minister to-night is going to be that this is the law. We are to be told that this is the application of the Determination of Needs Act, combined with the Non-Contributory Old Age Pensions Act. That is the defence. Let us face the facts. Almost all the people, retired civil servants, local government employees, who have benefited in any small degree by these increases under this Act, and who were receiving old-age pensions because of being 70 years of age, are now trooping up staircases to every local old-age pensions committee throughout the land. I have here cases from one committee, and I think that more are coming up this very week. An old-age pensioner, formerly receiving 6s. a week, has, because of this increase, had his pension reduced to 2s. a week. Another one, who was formerly receiving 8s. a week, because of this increase finds his pension now reduced to 4s. a week. Another man, whose pension was 4s. a week, has had it taken away altogether.
I must mention these facts to the Minister, and say to him that the kind of defence that is likely to be put up is not good enough to convince these old-age pensioners. They are saying to the local committees and their officers, "We have been cheated by Parliament." It is a bad thing for us as legislators to find ourselves in this position, when all our good intentions, displayed from the Treasury Bench and backed up by the Coalition and Parliament itself, to afford in some measure the sustenance needed because of war circumstances, are defeated, and we find we have cheated the


old folk of 70 years of age. They are very disappointed in us. I therefore beg the Minister, whatever his case may be about the Determination of Needs Act and the Non-Contributory Old Age Pensions Act, and despite the fact that this is the law, to try to find another answer and go into the whole subject, as the hon Member for Cheltenham has suggested, so that we can at least see to it that the few shillings given under the Act to old-age pensioners shall be theirs by right and none shall be taken away.

6.15 p.m.

Mr. W. J. Brown: I want to say a few words about this as the Member who initiated the movement for the Pensions (Increase) Bill, 1944. What I want to say will be directed to asking the House to consider who are the beneficiaries under that Act and what is the effect on them of what is now being done. The beneficiaries were a very badly treated body of men and women. As far as civil servants were concerned, the majority of them had put in many years of unestablished service which did not count for pensions at all. The pensions they were given on retirement were related only to that part of the service which was "established" and they went out on beggarly pensions. The House of Commons, which, after all, is the employer of these people, was nearly five years before it gave a penny of relief to that badly treated body of men and women in respect of an increase in the cost of living which the Minister of Labour estimates at 30 per cent., which I estimate at 60 per cent. and which others estimate higher still.
What I am saying about the Civil Service applies to Army officers as well, and I mention the Civil Service only because I know that aspect of the case well. We dealt in a mean and niggardly way with those people. We could find relief for everybody else in Britain within that five years, but it took five years to find a penny of relief for those to whom we, as a House of Commons, directly owe most, because we stood in relation to them as direct employers. After five years of agitation on my part, with others, did we give them full compensation for the rise in the cost of living? No. Did we give them half compensation for the rise in the cost of living? No. Did we give them quarter compensation for the rise in the cost of living? No. We gave them the

minimum increase with which the Front Bench felt that it could get away, having a coalition behind it in this House strong enough to override every form of opposition. I was going to say they gave them the widow's mite, but the widow's mite was all that the widow had. This was not the widow's mite, but the minimum that the Front Bench thought necessary to allow.
I have had letters from all over England expressing pathetic gratitude even for what we did. It was a moving experience to read those letters expressing gratitude even for that. Then we began to come up against other difficulties. Although over a year has gone by, half of them have not yet received the increase we gave. The Bill will have expired at the end of this year before the distribution of this miserably inadequate increase takes place. After the wretched few shillings a week that we gave that night—and I believe the House felt that it was doing a little to leave these folks a little better off—we went home feeling that some hundreds of thousands of people would be a little better off because of the Bill introduced by one Government Department. I observe that they have been studying the Scriptures, and they have come across that maxim of St. Matthew:
Let not thy left hand know what thy right hand doeth.
What is given by one Department has now been taken away by another; what was wrung from the Treasury has been squeezed back by the Assistance Board in the shape of reductions in the miserable supplementary old age pension. I want to leave the Minister ten minutes in which to reply, and I apologise for even taking the two or three minutes I have taken, but I want to say this: I wish Ministers could understand the way the minds of poor folk work. It would be better not to give a poor man or woman something and then, as they see it, wretchedly and fraudulently extract it in another way; it would be better not to give it at all than to give it and grab it back in that particular way. The men and women who are affected by what the Assistance Board is doing will be twice as bitter as they were before after this experience. Do not tell me that this is what the law says. If this is what the law says, tell us that you will alter the law. That is the only reasonable response that can be made to these representations.

Mr. Deputy-Speaker (Mr. Charles Williams): I must point out that if legislation is involved, it is out of Order in an Adjournment Debate.

Mr. Brown: I find that whenever I rise to advocate anything in this House it is out of Order.

6.21 p.m.

The Financial Secretary to the Treasury (Mr. Peake): I apologise to other hon. Members who wish to speak, but time is short, and I think Members wish to hear what has to be said from this bench on the subject. I hope it will not be thought that I have less sympathy for the old-age pensioners than the hon. Members who have voiced this grievance to-night. But let us get the position as clear as we can. Non-contributory pensions, as my hon. Friend said, are paid to those over 70 at the full rate of 10s. per week, but they are subject to an income limit. That is embodied, of course, in the Old Age Pensions Act of 1936, following on preceding Acts of the same character, and the effect is that anyone who has other unearned income of more than £65 5s. a year, does not qualify for the full non-contributory old-age pension.

Mr. W. J. Brown: This is not the matter—

Mr. Peake: Perhaps the hon. Gentleman will just let me make my statement. After the unearned income reaches £65 5s., for every additional £5 5s. of income the pension falls by 2s. weekly until, at £88 17s. 6d., it ceases to be payable altogether. Whether those scales are right or wrong it is not for me to discuss on the Adjournment, because in order to alter them legislation would be required. However, the principle embodied in the Act is, that if we are to give away out of the Exchequer money in respect of which no contributions have been paid, there should be an income limit of some kind in order to prevent persons who are quite comfortably off drawing a pension at the expense of other taxpayers. I do not think anybody can quarrel with that principle. Hon. Members may say that the amounts and the scales are wrong, but I do not think anybody can quarrel with the principle. This statutory scheme has these two effects: it avoids, as I have pointed out, giving away the taxpayers' money to persons who are

comfortably off; the descending escalator also has the effect of stabilising income at about 35s. a week for a single person or, I think, double that figure in the case of a married couple.
We come now to the particular case of the effect of the Pensions (Increase) Act of last year. I do not know whether hon. Members foresaw what the consequence of that Act would be, but I must point out to them the extreme difficulty of treating income derived under that Act on a different basis from income from other sources. I am sure hon. Members will appreciate this difficulty. Suppose there is a person who, under the Pensions (Increase) Act, has his pension made up to a figure of, let us say, £80 per annum. Imagine also, living next door or in the same street, another aged person who, equally, has an income of £80 per annum drawn from some other source. In one case it may be that one of them has saved throughout his working life, and has bought an annuity of £80 per annum in order to see him through his old age. In the other case, the person may be drawing £80 per annum under an industrial scheme which was set up in the business in which he worked. Or, again, there may be a person who has been a private employee in domestic service and who is drawing a pension from the employer with whom he has served for many years.
There might be all these cases where the income is the same—under the Pensions (Increase) Act, £80, under a private industrial scheme £80 and under an annuity scheme £80—and I do not see how any Member can say that it would be practicable to differentiate between them, or to say in one case "We will disregard a certain part of your income from another source and give you an old-age pension in full," and in the other cases I have mentioned, in the case of the annuity or the pension from private sources say "We are going to regard all your income from those other sources and reduce your old-age pension according to the existing escalator scale." I am sure hon. Members will see the great difficulties and anomalies which would arise if we were to select for special treatment a particular class of pensioner who comes under the Pensions (Increase) Act, and to say in that case, and in that case alone, "We will disregard your income for the purposes of old-age pension."

Mr. Lipson: This is a temporary Measure.

Mr. Peake: That is perfectly true, but it is quite clear that it is a temporary Measure that will continue for some time: we could not allow the Act to expire at the end of this year—that would create hardships. This, to sum up, is the dilemma in which we find ourselves. It is very difficult to select a particular class of income and to say that the recipients in that class shall not have their income regarded for the purpose of old age pension and, at the same time, say to another class, "You shall have your income regarded."
However, there have been a few cases—and I would like hon. Members to know this, because it is of some importance—where, within the administrative field, we have been able to do something to remedy the position. There have been cases where, owing to the escalator stairs being 2s. each, payment of the full addi-

tion under the Pensions (Increase) Act has resulted in a net loss of income of a few pence each week. By administrative action, by not paying the whole of, say, the additional 30 per cent., but something slightly less, we have been able, in the case of retired State employees, to prevent that loss falling on the pensioner. If cases of that sort come to the notice of hon. Members I hope they will communicate with me, so that I can see whether any necessary action can be taken on those lines. I cannot go further than the answer which my right hon. Friend gave in the House the other day, but I do undertake to convey to him the general feeling of the House and to place the facts, as they have been stated by my hon. Friends, before him.

Question put, and agreed to.

Adjourned accordingly at Twenty-nine Minutes after Six o'Clock.